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Home / World / According to the Federal Banking Commission, billions of Puerto Rico's debts could be invalid

According to the Federal Banking Commission, billions of Puerto Rico's debts could be invalid



By Nicole Acevedo and Associated Press

SAN JUAN, Puerto Rico – The Federal Authority for Control (FOMBPR), which oversees the finances of Puerto Rico , asks a court that invalidates more than US $ 6 billion in US debt, a move that would hit bondholders.

The Board said late Monday that debts include all bonds issued in 201

2 and 2014 "Clear violation" of the debt limits of the Puerto Rican constitution. Instead of maintaining a balanced budget, they were used to finance deficit spending.

If a federal judge agrees to the allegations, bondholders would lose their investments.

"This is really a milestone," Puerto Rican economist José Caraballo said Tuesday to The Associated Press. "It may be the best step of the board in the two years of its existence."

It is unclear when a judge would decide on the board's application, but Caraballo said he lends the government's bargaining power, noting that Detroit had taken a similar step during the report's bankruptcy.

Caraballo said that those who bought public bonds during that time would accept a large cut rather than risk total loss. Most of them are hedge funds and not individual investors.


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