NEW YORK Oct 15 Puerto Rico will do whatever it
takes to honor its debt commitments, Governor Alejandro Garcia
Padilla said on Tuesday, as local officials tried to reassure
investors after a jump in yields effectively shut the U.S.
commonwealth out of capital markets.
Puerto Rico's bonds have been trading at around 60 cents on
the dollar, pushing yields up above 9 percent and forcing Puerto
Rico to rely on private debt sales to banks instead of issuing
debt on capital markets.
Investors have largely ignored a series of reforms aimed at
kick-starting the economy and reigning in Puerto Rico's public
finances, instead treating the Caribbean island's debt as a
potential default risk.
"We will do everything, and I repeat everything, that is
necessary for Puerto Rico to honor all its commitments. It is
not only a constitutional but also a moral obligation," Padilla
said at the start of a conference call with investors that
lasted nearly two and a half hours.
Puerto Rican officials have expressed frustration at their
rising borrowing costs, saying investors are not recognizing
painful reforms to the pension and tax systems and are unfairly
punishing the commonwealth in comparison with U.S. states in
similar or worse situations.
Officials from Puerto Rico's Government Development Bank,
also present on the conference call, said they have enough
liquidity to finance the commonwealth through at least the end
of the current fiscal year in June 2014.
Officials did not rule out further private placements of
sales tax revenue bonds, known as COFINA bonds, this year and
said they would only issue debt in the $3.7 trillion municipal
bond market if conditions improved significantly.