Puerto Rico

About Puerto Rico

Puerto Rico filed for bankruptcy in May 2017 under PROMESA, a 2016 federal law that created a restructuring framework for US territories. Puerto Rico had 70 billion in bond debt and 50 billion in unfunded pension obligations. The debt crisis resulted from years of borrowing to cover budget deficits, a shrinking population, and a weak economy. The Jones Act restricted shipping, increasing costs. In 2022, a deal was reached to restructure approximately 33 billion in debt. Bondholders accepted approximately 60 cents on the dollar. Pensions were protected. The restructuring was the largest municipal bankruptcy in US history, surpassing Detroit. Puerto Rico still faces economic challenges, including a declining population, hurricane damage, and infrastructure needs. The case highlighted the unique fiscal relationship between the US and its territories.