All rights reserved. Long before Hurricane Maria left millions on the island without power or water, Puerto Rico was battling a financial crisis years in the making. Some have already agreed to take them. Another key player: Aurelius Capital Management, a New York hedge fund that lists nearly $500 million in Puerto Rican bonds. "Think of Maria as a bomb. Trump is framing the US response in Puerto Rico as an act of charity and goodwill. Some of the $15 billion Congress approved for hurricane relief after Harvey hit will be used for Puerto Rico. They kept buying Puerto Rican debt even as the island fell into an 11-year recession that deepened the debt crisis. Less than 25% of Puerto Rican debt is held by hedge funds, according to estimates by Cate Long, founder of … "It's not as though these are vultures circling around the island.". Factset: FactSet Research Systems Inc.2019. We all know Puerto Rico is a moneymaking machine for the United States of America. Currently, the U.S. territory is over $70 billion in public debt.. Puerto Rico’s debt is in the form of municipal bonds that we were sold to individuals, mutual funds and institutions. A Warner Media Company. Puerto Rico's crippling debt load -- totaling $73 billion -- forced the island to file in May for the biggest U.S. municipal bankruptcy in history. Monarch Alternative Capital. Trump's tweets come amid widespread protests in Puerto Rico for the governor to resign amid a corruption scandal, but it isn’t Trump’s first time misleading on Puerto Rico’s recovery. If you're a bona fide resident of Puerto Rico during the entire tax year, you generally aren't required to file a U.S. federal income tax return if your only income is from sources within Puerto Rico. Another bonus: Puerto Rico's debt is "triple tax-exempt." delayed one disaster relief bill for months. Washington owes Puerto Ricans a future based on democratic legitimacy and a financially and socially viable development strategy—a development strategy that is more than a set of tax breaks for profitable U.S. corporations.” Read more of the U.S. obligation to Puerto Rico here. Puerto Rico, Trump tweeted, owes "billions of dollars" to "Wall Street and the banks, which, sadly, must be dealt with.". San Juan Mayor Carmen Yulin Cruz urged Trump not to confuse Puerto Rico's debt problems with its humanitarian crisis. The system allowed Donald trump, to declare bankruptcy in Puerto Rico over a deal that backfired on a golf course. Question: This is the second tweet about Puerto Rico where our President brought up debt. The U.S. territory defaulted Aug. 3, handing over only 1% of the $58 million owed. Claim: "Puerto Rico got 91 Billion Dollars for the hurricane, more money than has ever been gotten for a hurricane before." During the campaign, Trump vowed not to bail out Puerto Rico. Trump signed another aid bill in June that will send an additional $1 billion to the island. Bondholders, most of whom haven't been paid for over a year, have long realized there will be losses. President Donald Trump falsely claimed in a pair of tweets Thursday that Congress had "foolishly" sent $92 billion of aid money to Puerto Rico, which “squandered away or wasted” much of it. The United States sends $17 billion in welfare funds to Puerto Rico every year. Some of the biggest holders include mutual funds run by household names like OppenheimerFunds, Franklin Templeton, Goldman Sachs (GS), BlackRock (BLK) and T. Rowe Price. Related: A night of desperation in San Juan's sweltering airport. Claim: “Trump Made Puerto Rico’s Debt Worse After His Golf Course Filed For Bankruptcy" This is more than twice the amount given to Texas & Florida combined. ... over 40 percent of all households in the states will not earn enough money this year to owe … For instance, Autonomy Capital, a New York hedge fund run by former Lehman Brothers banker Robert Gibbins, owns nearly $1 billion of Puerto Rican general obligation bonds, according to court documents filed this summer. FCO Advisors, a hedge fund run by former Goldman Sachs municipal banker Hector Negroni, is sitting on more than $400 million of Puerto Rican bonds as well. The bulk of aid dollars is still in Washington, much of it waiting on processes that require officials to submit a series of plans outlining how they expect to use the money and await federal approval. But aid has been slow to reach the island for a number of reasons, including Trump himself. High unemployment forced hundreds of thousands of residents to flee the island, further eroding the tax base. Puerto Rican Debt Claimed in Court: $606,600,000. This "maddening process" makes it "so bloody hard to get any kind of resolution," said John Rousseau, director of fixed income at Cumberland Advisors. With the protection thaf the bill gave from lawsuits, the governor of Puerto Rico, Alejandro Garcia Padilla, suspended payments due on July 1. He called for something like the Marshall Plan, the massive federal aid provided by the U.S. to rebuild Western Europe after World War II. Moreover, the population that Puerto Rico has managed to retain is aging rapidly. All times are ET. History. He’s repeatedly said that Puerto Rico got $91 billion in aid, that they’ve wasted it, and complained that Congress should stop giving them money. There is hope that Hurricane Maria -- and the federal attention it requires -- could be the catalyst to break the logjam. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. The Florida firm manages about $150 million of insured Puerto Rican bonds owned by individuals. Even though bona fide residents of Puerto Rico do not have to pay federal income taxes on income sourced from Puerto Rico, the situation is different if you are self-employed. President Trump pointed out Puerto Rico's "massive debt" problems on Monday. Morningstar: © 2019 Morningstar, Inc. All Rights Reserved. Puerto Rico owes bondholders $74 billion and current and retired government employees another $49 billion in pension benefits. Congress has allocated $42.5 billion in disaster aid for Puerto Rico, according to federal data, but the island had received less than $14 billion through May. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Who does Puerto Rico owe? How much federal aid will Puerto Rico get? There is some evidence that money and relief have been wasted — aid and food have rotted amid mismanagement, and a corruption scandal recently erupted involving the alleged embezzlement of $15.5 million in federal funding between 2017 and 2019 — but there is no evidence that tens of billions of federal dollars have met this fate. I have no argument with the numbers used on the government transfer from the United States to Puerto Rico, which is the top half. Jane C. Timm is a political reporter for NBC News. Federal aid won't erase Puerto Rico's mountain of debt. In reality, most of that money is owed to everyday investors. PREPA, the island's electric utility, filed for bankruptcy in July after Puerto Rico's oversight board rejected a restructuring agreement with bondholders. "For the most part, Main Street America owns this debt," Long said. ....of which was squandered away or wasted, never to be seen again. Puerto Rico faces $5.4 billion of bond payments over the next 12 months, showing the pressure on the Caribbean island as it moves closer toward defaulting on its debt. First published September 27, 2017: 2:35 PM ET, These are your 3 financial advisors near you, This site finds and compares 3 financial advisors in your area, Check this off your list before retirement: talk to an advisor, Answer these questions to find the right financial advisor for you, An Insane Card Offering 0% Interest Until Nearly 2020, Transferring Your Balance to a 14-Month 0% APR is Ingenious, The Top 7 Balance Transfer Credit Cards On The Market Today, Get $300 Back With This Outrageous New Credit Card. … Though they don’t owe taxes on individual income, like other Americans, Puerto Ricans pay business, payroll, and estate taxes. President Trump seems pessimistic about Puerto Rico's ability to pay its debts. "You don't put debt above people. The devastation wrought by Hurricane Maria has shined a bright light on this glacial process that threatens to complicate the island's recovery efforts by cutting the territory off from borrowing money for years. You can also find out immediately by using one of two key online search resources. The amount of money owed by Puerto Rico's pensions in 2019. That view may, in part, reflect his own financial experience there, where he once got stung by a … President Donald Trump falsely claimed in a pair of tweets Thursday that Congress had "foolishly" sent $92 billion of aid money to Puerto Rico, which “squandered away or wasted” much of it. Up until now, Puerto Rico's messy battle with its bondholders has played out in court, with dozens of cases being fought by parties that often have competing interests. --CNNMoney's Patrick Gillespie, Jill Disis and Julia Horowitz contributed to this report. Billions of Dollars in Disaster Aid Owed to Puerto Rico Continues to be Illegally Delayed by HUD. A Puerto Rico debt crisis of epic proportion is officially underway. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. Trump to Puerto Rico.....You already owe too much money. With Puerto Rican infrastructure destroyed and their economy in ruins, how does Trump expect them to pay back their debt? Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Nearly 300 bond mutual funds own Puerto Rican debt, according to data compiled by Morningstar. Puerto Rico is widely expected to miss most, if not all, of the $2 billion bond payment it owes creditors by July 1. On June 30, 2016, US President Barack Obama signed the Puerto Rico Oversight, Management and Economic Stability Act, or PROMESA, which empowered him to appoint a seven-member Financial Oversight and Management Board, with ultimate control over the Commonwealth's budget and the power to negotiate the Commonwealth's debt restructuring. Like all Americans, the people of Puerto Rico went to the polls on Tuesday. They owe a lot to Puerto Ricans. Business. They owe a lot to people who bought bond funds that bought their municipal bonds. Puerto Rico will help you make the most of any money you've invested in your lifetime.The island has several tax-related incentives to draw in non-Puerto … All Rights Reserved. They owe a lot to retirees who bought their municipal bonds. At least 2,975 people, making it among the deadliest natural disasters in history... Julia Horowitz contributed to this report are vultures circling around the island..... 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