Rep. Velázquez Accuses Vulture Funds of Predatory Practices Against Puerto Rico

Puerto Rico's Fragile Infrastructure

• ⚠️ Despite nearly eight years passing since the hurricanes, Puerto Rico's electrical grid remains fragile, plagued by chronic outages due to weak infrastructure and vegetation issues.
• ⚡ The earthquakes in 2022 also impacted power generation plants, and the post-hurricane reconstruction is described as more of a "patching up" than a full rebuild, leaving the system delicate.

Vulture Funds and Debt Exploitation

• 🎯 Vulture funds, led by GoldenTree Asset Management, are accused of exploiting distressed governments by buying cheap debt and demanding maximum payment.
• 💰 GoldenTree owns $1.3 billion in PREPA bonds and is advocating for electricity rates to be set high enough to pay back $12 billion, which includes principal and interest.
• 📈 This would necessitate raising energy rates by approximately 8 cents for over 50 years to cover bondholder repayment.

GoldenTree's Past and Future Impact

• 💸 GoldenTree previously profited $437 million from the Kofina's restructuring plan, which led to Puerto Ricans paying the highest sales tax among US states.
• 📉 Their current claims against PREPA could exacerbate hardship in a jurisdiction where over 40% of the population lives in poverty.
• 🛠️ While federal funds are available for grid rebuilding, estimates suggest the grid needs significantly more than $15 billion to be fully fixed, with operational costs like fuel and maintenance also needing to be covered within the rates.