ValueWalk Features Eric LeCompte Discussing Puerto Rico's Debt

Eric LeCompte, Executive Director of Jubilee USA was recently featured in ValueWalk speaking on Puerto Rico's debt. Read excerpt below and follow link to full article.

Puerto Rican Debt Negotiations At Critical Crossroads

By: Mark Melin

Eric LeCompte, Executive Director of Jubilee USA, a debt relief advocacy group, told ValueWalk negotiations have become “a Kabuki dance over what should and should not be in the plan.”

The fiscal plan will set the framework for a final solution, which could occur through two routes.

One solution can occur through direct negotiations between all interested parties, including creditors. The other is for Judge Laura Taylor Swain, who was appointed to supervise the bankruptcy process, to issue a ruling on the final settlement. The negotiation process includes input from creditors while Judge Swain, who has shown a propensity to side with those advocating debt relief, is not required to negotiate with creditors.

Pushing for a solution comes as US lawmakers authorized Promesa in June 2016 to create a board and iron out a turnaround plan which, to date, has not materialized.

LeCompte, who negotiated with Congress to set up the current process and advocates against austerity measures until hurricane relief is complete, would like to see a long-term solution. He advocates creating a new type of bond that increases its payout to investors as the economy picks up steam but automatically suspends debt payments if or when another natural disaster occurs.

If a permanent solution is created that gives investors an extra payout during times of strong economic growth it would set a precedent. Currently being discussed are solutions where a Puerto Rican bond might pay 6% or 7% during “normalized” conditions. If the economy improves beyond clear benchmarks investors might receive 10%, LeCompte said. But if a natural disaster were to occur, the bond payments would be halted until the humanitarian crisis subsides.

At issue in negotiations are government workers taking a 10% cut in their pensions while creditors might take an 80% cut in their payments until the current hurricane relief program is complete.

“If we don’t get it right, if Puerto Rico doesn’t get back to economic growth, no one wins,” LeCompte said. “Consumers need to consume in order for an economy to grow and there can only be promise if good economic policies are in place.”

Read more here.