In Puerto Rican Debt Standoff, Proof of the Rising Clout of Minority Holdouts

Wall Street Journal

In Puerto Rican Debt Standoff, Proof of the Rising Clout of Minority Holdouts

By Ian Talley

Puerto Rico’s debt woes are an uncomfortable reminder of a much larger problem in sovereign bond markets: Minority holdouts now have the upper hand in government debt restructurings.

But unlike Washington’s proposal to legislate a fix to Puerto Rico’s debt troubles, the U.S. has no plans to push through laws that might undermine holdouts’ power more broadly.

...

"But bond experts warn the settlement and related court rulings set a precedent for other creditors grappling with governments over debt write-downs. Creditors may be less willing to negotiate with governments, complicating what was already a tough process that can make or break an economy.

“The settlement validates a predatory business model,” says Eric LeCompte, executive director of a non-profit organization that advocates debt relief, the Jubilee USA Network."

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