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PR: Let's start with financing...

posted by John Pottow

OK, so I start from the premise that holdouts don't want to restructure debt but others do.  Thus, the goal should be incentivize restructuring in a way that beats up on holdouts.  Could the Feds say they'll offer financing (e.g., underwrite new bonds) for people who exchange bonds/debt?

March 1, 2016 at 6:19 PM in Puerto Rico

Comments

& what happens to the ones that refuse to exchange?

Posted by: Inquiring Mind | March 02, 2016 at 10:59 AM

Exit consents?

Posted by: CRT Monitor | March 02, 2016 at 01:46 PM

If the financing is attractive enough (relative to what looks like would be recovered without it), those who opt out might be liable to their shareholders (or partners, etc.) for rejecting this deal.

Posted by: Dalié Jiménez | March 03, 2016 at 12:44 PM

Dalié Jiménez makes a great point that dovetails (in changing incentives) to some extent with the proposal of Gulati & Rasmussen in 1/14/2016 FT Alphaville.
http://ftalphaville.ft.com/2016/01/14/2149806/guest-post-puerto-rico-debtor-heal-thyself/

Otherwise, holdouts make life impossible for those who cooperate, a la Argentina.

Posted by: Inquiring Mind | March 03, 2016 at 02:14 PM

& for more from Pottow on why bankruptcy is needed here, see his Op Ed in The Hill

http://thehill.com/blogs/congress-blog/economy-budget/260994-the-pitfalls-of-no-puerto-rico-bankruptcy

Posted by: MBJ | March 03, 2016 at 02:21 PM

So I think the Feds could do this -- they could incentivize an exchange offer -- but the question is, as Adam points out, do they have enough (legally available) financing to make it attractive? I don't know.

Posted by: John Pottow | March 04, 2016 at 12:30 AM

The comments to this entry are closed.

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