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Friday, Sep 29, 2017

Seema Balwada, CFA / September 29,2017

Latest On The United States Government Aid Response in Puerto Rico

“Big Decisions Will Have To Be Made As To The Cost of Rebuilding,” President Donald Trump Sep 29 How much of a role will the Federal Government play in solving Puerto Rico’s crisis? “Big decisions” are coming on the cost of rebuilding the Island. Puerto Rico creditors hope the Island receives the massive fed assistance necessary to allow a “speedy recovery”. President Trump said on Monday that Puerto Rico’s billions of dollars of debt “must be dealt with”. Tom Bossert Homeland Security advisor stated the White House is willing to consider Puerto Rico debt in aid deals. Trump said to-day the Fed Government will work with Puerto Rico to figure out how to fund the rebuilding effort and what we will do with the already existing Island debt. Contrary to the media’s portrayal, Governor Ricardo Rosselló said, “The President and the Trump administration have “delivered” every time he has spoken with them.” President Trump is expected to visit the Island on Tuesday October 3.

White House Willing To Consider Puerto Rico Debt in Aid White House homeland security adviser Tom Bossert says the administration is willing to consider Puerto Rico debt in aid deals. Bossert says White House is willing to consider actions related to Puerto Rico’s ongoing debt crisis in aid deals, however “don’t think we will have to address the debt issue in first round of aid.” Speaker Paul Ryan expects the House to receive a massive Puerto Rico emergency funding request from the White House by mid-October. “As soon as we get these requests we will finance these requests,” Ryan said.

PREPA Bondholders and Bond Trustee Appeal to the United States Court of Appeals On Sept 28, PREPA bondholders (Ad Hoc Grp and bond insurers Nat’l Public Fin Gty, Assured Gty) appealed to the United States Court of Appeals for the First Circuit to enforce their statutory right to have a receiver appointed at PREPA which was denied by Judge Swain. While bondholders agree to be accommodative as to scheduling issues, it has become clear bondholders have the legal and financial resources to pursue their constitutional rights. The U.S. Bank, PREPA bond trustee, also appealed for a receiver on behalf of all bondholders.

Puerto Rico Vows to Continue Debt Restructuring in Storm’s Wake The Island’s Fiscal Agency tells bankruptcy judge the hurricane won’t derail the court process set-up to restructure about $70 billion in debt; agency says it needs only a four week extension of some court deadlines.

Judge Swain Overseeing Puerto Rico Debt Restructuring Awaits Input  The Government of Puerto Rico and Financial Oversight Board have requested the Court postpone hearings previously scheduled to take place this week and next week. “In light of the immediate crises and need for attention to the safety and stability of day-to-day life for the people of Puerto Rico,” the Court grants their requests and “The Court hopes that Puerto Rico will benefit in the coming days from the delivery of substantial portions of the massive federal aid that is needed.”

Puerto Rico Debt Restructuring Proceeding on Separate Track From Relief Efforts… Parties in Puerto Rico Title III Debt Restructuring Cases Want Next Omnibus Hearing on Oct 18 or Nov 15 “I still think the debt restructuring is something that is going to be proceeding on a separate track from relief efforts,” Moody’s analyst. On Sept 28 the Ad Hoc Group of General Obligation Bondholders approached the Court: “In light of discussions that transpired at recent mediation sessions, the substance of which is confidential and may not be dis-closed, the G O Group respectfully requests that the Court adjourn all matters scheduled to be heard at the Oct Omni-bus hearing to the Omnibus hearing scheduled for Nov 15 2017, subject to further developments.” The Federal Board, COFINA Agent and The American Federation of State, County and Municipal Employees would like the next Omnibus hearing to discuss their matters be on October 18. Bondholders are hopeful that Puerto Rico gets massive necessary federal aid.

Puerto Rico To Get Huge Capital Injection Within Two Days…Long Term Recovery Package Anticipated
Speaker Ryan said Puerto Rico FEMA disaster account will get $6.7 billion by weekend. He noted Trump waived a matching funds requirement. The cash-strapped Island won't have to contribute to cost of fed assistance for at least 6 months. Ryan expects the White House to send Congress a request for a long-term massive recovery package once assessments are conducted. “We will quickly act on that request.” Democrats stated $50 to $70 billion needed to restore Puerto Rico. In relationship to Katrina in 2005 New Orleans received $120 billion in fed aid.

$40 Million Immediate Funds for Puerto Rico Roads From DOT…$8 Million Grant for Transit Systems From Federal Transit Administration Fed Highway Administration (FHWA) sent $40 million in “quick release” Emergency Funds to restore essential roads and bridges. The funds supplement the $2.5 million awarded to the Island for damages related to Hurricane Irma. The Fed Transit Administration awarded $8. 4 million of grant funding to Puerto Rico's transit systems.

Aid includes Shipments of Cash As part of its push to provide aid to the storm-battered Island, the Federal Government is making shipments of a key commodity: cash, and lots of it, according to Treasury Secretary Steven Mnuchin. “We’ve made two giant cash shipments and in times like this we want to make sure” they have cash they need to keep the economy functioning.

Jones Law Waived For Puerto Rico Relief Homeland Security Secretary signed waiver of a fed law called the Jones Act. The act clears the way for foreign ships to deliver supplies to Puerto Rico. Governor Rosselló on Twitter to Trump's action: “Thank you @POTUS.”

Tax Relief For Hurricane Victims... $1 Billion to Rebuild Homes From Federal Home Loan Bank of NY The House approved legislation allowing the Fed Aviation Administration to continue to operate along with several tax relief measures to aid hurricane victims. The Fed Home Loan Bank of NY has made $1 billion disaster relief funding available to members to help rebuild communities in FEMA-designated disaster areas.

Small Business Administration (SBA) Offers Puerto Rico Residents Disaster Loans SBA loans are granted when not covered by FEMA or insurance. SBA disaster program is for small business, home-owners, renters and non-profits. SBA is offering up to $2 million for businesses. For individuals whether a homeowner or tenant loans can be up to $200,000, for replacement of household goods, clothing and automobiles loans can be up to $40,000. Interest rates can be as low as 1.8% loans are for 30-years.

Risk-Modelers Estimate Hurricane Damage Hurricane Maria could cause $15 to $30 billion in insured Puerto Rico losses, according to risk modeler RMS. Possible labor shortages and infrastructure damage were factors in the estimate. The estimate also includes property damage and costs tied to lost profits at businesses. AIR Worldwide, another risk-modeler, said Maria could cause $40 to $85 billion in insured losses. Democrats have stated $50 to $70 billion in aid to Puerto Rico is necessary. Homeland Security ad-visor stated “people will be blown away by the White House aid package for Puerto Rico”. President Trump on Friday Sept 29 said the rebuilding effort “will end up being one of the biggest ever”.

U.S. Army Corps of Engineers Completes 90% PREPA Damage Assessment…Power Task Force At Work U.S. Army Corps of Engineers has completed 90% of PREPA damage assessment, has begun work to restore electrical system. White House stated biggest beneficiaries of initial aid package will be electric and the water utilities.

FEMA Assures Aid For PREPA Rebuild FEMA said Wednesday they will assist the Electric Power Authority regardless of other financial offers to the utility. “We are going to be offering our aid as it is requested under FEMA parameters. Any other aid that PREPA gets should be welcomed,” President Trump has exempted Puerto Rico from having to match FEMA’s financial aid to repair public infrastructure, the group noted that the exemption is only for 180 days. “We welcome and appreciate the expression of support from creditors,” said the Oversight Board’s executive director, regarding a loan offered by bondholders to help repair the electric grid.

Federal Oversight Board’s Future Role In Question In Washington, Puerto Rico’s Federal Oversight Board met with Speaker Ryan and Senate Majority Leader McConnell. Federal Board Chair Jose Carrion III said, “It is too early to come to any conclusions about the budget and our role for the future.”

If you have any questions or desire updated information contact your GMS Account Executive. Information taken from sources deemed reliable. This update does not purport to include all available information

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