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Home>Puerto Rico's massive debt restructuring, in one chart

Puerto Rico's massive debt restructuring, in one chart

Puerto Rico's massive debt restructuring, in one chart

10/05/2017

By Sunny Oh

The limelight has returned to Puerto Rico's debt restructuring, which has been dragged through the courts this year

When President Donald Trump called for an end to Puerto Rico's debt woes on Tuesday night, it briefly turned the public's attention to the territory's negotiations with its bondholders to reduce the amount it owes.

A look at how a potential restructuring of its entire debt load stacks up relative to other municipal bankruptcies can underline the scale of its problems.

Mired in $73 billion of debt, the cash-strapped territory will need additional tens of billions of dollars to recover from Hurricane Maria's devastation. The disaster has compounded the island's fiscal problems, which have gradually worsened over the years as its shrinking population, stagnant economy and aging infrastructure have all but destroyed Puerto Rico's ability to pay its creditors back.\

Read: Why does Puerto Rico have more than $70 billion in debt? (http://www.marketwatch.com/story/why-does-puerto-rico-have-more-than-70-billion-in-debt-2017-10-04)

As of now, the territory is restructuring a portion of its debt through a Title III process, analogous to a bankruptcy filing. As it is not a municipality, Puerto Rico has had no recourse to chapter 9, a section of U.S. legal code employed by Detroit to declare the largest municipal bankruptcy on record in 2013.

Trump's remarks in a prerecorded interview with Fox News may signal the White House's intervention in this process, but analysts say ultimately the court -- not executive fiat -- will decide any progress made in Puerto Rico's case.

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