Puerto Rico Releases Report Calling For Concessions From Creditors

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from The Wall Street Journal,

Report’s release sends some Puerto Rico bonds to record lows.

Puerto Rico on Monday released a report calling for concessions from the island’s creditors in order to stave off a looming cash crunch and take steps toward achieving fiscal health.

The release of the report, which suggested a debt exchange that could leave bondholders with less, sent some Puerto Rico bonds to record lows. The price of some bonds sold in 2014 fell to 69 cents on the dollar from about 77 cents last week, according to Electronic Municipal Market Access website.

The U.S. commonwealth owes about $72 billion, nearly 70% of its economic output. Puerto Rico has been struggling with a weak economy and declining population. Despite recent efforts to raise taxes and balance the budget, analysts believe the central government could run out of cash as soon as July, which could lead to a government shutdown, employee furloughs and other emergency measures.

The report “for the first time acknowledges the true extent of the problem,” Puerto Rico Gov. Alejandro Garcia Padilla said in a news release. “We must make difficult decisions to meet the challenges we now know are ahead and I intend to do everything in my power to lead us through this time.”

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