Puerto Rico is facing an impending fiscal crisis, brought on by the island’s
US$73 billion in municipal debt. While the government is actively implementing reforms and engaging in tax hikes to address its overwhelming debt, such efforts are not likely to be sufficient, and with the upcoming maturity of Puerto Rico Electric Power Authority’s (PREPA) bank credit lines in August, there is a very real possibility that the entity will default on its debt. The prospect of default has drawn the attention (and anxiety) of both investors and legal analysts, because until last week, Puerto Rico did not have any legal regime for its municipal entities' bankruptcy.
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