In “Puerto Rico’s Debt Lessons” (Review & Outlook, May 16), you note that the presidentially appointed Oversight Board justifies its decision to interfere in negotiations between the Puerto Rican government and its creditors by claiming that “Promesa’s Title III bankruptcy process to reduce the debt was all but inevitable.”
This is not true. While Title III may have been “inevitable” for some of the island’s 18 different public-debt issuers, the Oversight Board intervened in consensual negotiations between the Commonwealth and its general obligation (GO) bondholders when they were close to reaching a last-minute agreement that would have kept Puerto Rico itself out of bankruptcy. This deal would have provided Puerto Rico with significant relief and a realistic pathway to growth and resumed market access.
Alexander Hamilton was the founding father that perhaps most influenced the tenets of the American economy. Hamilton’s brilliance is that he realized the economic success of any government depended upon its ability to access capital markets and respect for the rule of law. The framers of the Commonwealth’s Constitution understood this as well, and provided that payment of general obligation debt receive priority over any other debt incurred by the Commonwealth. Yet today, neither the Commonwealth nor the Oversight Control Board appear to be heeding Hamilton’s wisdom nor its Constitution, much to the detriment of the people of Puerto Rico.