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[Repetenone por Acumacin ran Cece ons oe US. House of Representatives Committee on the Judiciary ‘Subcommittee on Regulatory Reform, Commercial and Antitrust Law 11R.870, The “Puerto Rico Chapter 9 Uniformity Act of 2015" ‘To amend title 11 ofthe United States Code to treat Puerto Rico asa State for purposes: ‘of Chapter 9 of such tite relating tothe adjustment of debts of municipalities February 26,2015 Representative At-Large Puerto Rica House of Representatives ‘mnatal@camaraderepresentantes.org, a COMMITTEE ON THE JUDICIARY SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW HLR, 870, The "Puerto Rico Chapter 9 Uniformity Actof 2015" Written Testimony of YA Rep. Manuel Natal February 26, 2015, Mr. Chairman, Ranking Memiber and all other members of the Committee and Subcommitte: My name is Manuel Natal, and 1 am a majorty representative at-large fn the Puerto Rico House of Representatives. Although I will not have the opportunity to serve as. witness in today’s Committee Hearing, in lieu of my presence, I would like to share with the honorable Committee on the Judictary and its Subcommittee on Regulatory Reform, Commercial snd Antitrust Law a few written comments regarding the proposed legislation, HLR. 870, the “Puerto Rico Chapter 9 Uniformity Act of 2015 Inthe context ofthe current situation in Puerto Ric. Puerto Ric's outstanding debt is unpayable, Our Department of Treasury, the Government Development Bank for Puerto Rico, and our largest public corporations lack the necessary cash to uphold their debt repayment schedules as they become due As of mid:2014, every single, publicly traded Gnancial instrament isued by the Government of Puerto Rico has been dovngraded to speculative an highly speculative status, and our financial officers have taken it upon themselves to resort to predatory lenders in an attempt to raise short-term cash destined exclusively towards historically expensive longterm refinancing deals Just last week, a major credit rating company warned the municipal bond market that our central governments bonds, Including those fsued by the Government Development Bank (GDB) for Puerto Rico, carried substantia risk as the Puerto Rican economy continues to lag, and the Impending tax reform will be a futile attempt at increasing government revenues to any meaningfol degree in the near term.! None of ths will change with the approval of H.R. 870, 1m the testimony that follows, ! will explain my opposition to H.R. 870, focusing primarily on the question of the bill's fiscal utility and its democratic desirability. 1s Chapter 9 bankruptcy sufficiently useful to the Puerto Rican fisc? The Government of Puerto Rico has an aggregate $723 billion in oustanding debt. Approximately $4 billion ofthat deb is attributable to debt isued by the various cities of Puerto Rico, or roughly 55% of our aggregate debt. Another $50 billion is ateributable to debe issued by our government's public corporations, or approximately 69% of our aggregate, The remsinder is directly attributable to the central government's issuance of general credit obligations? In order to determine whether any part of this debt may be restructured through Chapter 9 proceedings, the first question that must be addressed pertains to which part, \f any, of our government's aggregate debt may be treated as debt of a muicipality "ponds downgrades Puerta Rico GO bonds to Cat fhm B2, COFINA wo BRCan om Ma," Moody's lnvestrs Serve. 19 etry 2015, valle ot gs neva canveeach Mooddovngmds Puro Rie G0 tondeto Ca some2-PR. 318953 2S Aen