By: Rick Brown

Insurers of Puerto Rican bonds sued the U.S. commonwealth late Thursday over its recent debt default, the first lawsuit against the island since its governor called its $70 billion debt load “unpayable” last June.

The lawsuit by Assured Guaranty (AGO.N) and Ambac Financial (AMBC.O), filed in U.S. federal court in Puerto Rico, asks a judge to declare that Puerto Rico violated the U.S. constitution when it diverted $163 million from revenue streams meant to pay debt at the island’s infrastructure, highway and other agencies.

It also looks to block Puerto Rico from executing these so-called clawbacks.

The lawsuit is an opening salvo in what could be a long and expensive court fight over Puerto Rico’s efforts to restructure $70 billion in debt. The island lacks access to U.S. bankruptcy protections, and creditors have been resistant to voluntary concessions, making for a messy and unpredictable path to restructuring.

In June, Governor Alejandro Garcia Padilla called the island’s debt load “unpayable” and sought concessions from bondholders.

Last month, he said the only way to afford to pay debt backed by Puerto Rico’s constitution was to redirect or “claw back” revenues earmarked for debt at other agencies.

The infrastructure authority, PRIFA, missed a $36 million debt payment on Monday as a result of the so-called clawbacks.

The plaintiffs argue clawback authority applies only when there is no other money available to pay debt, which Puerto Rico has not proven is the case. The clawbacks “substantially and unjustifiably impair … contractual rights,” the insurers allege.

They also say Puerto Rico is wrongfully using clawbacks to fund government services, and are diverting bondholders’ collateral in violation of the Takings and Due Process clauses of the U.S. constitution.

The complaint names Garcia Padilla, along with Government Development Bank President Melba Acosta, among its defendants. A spokeswoman for Garcia Padilla’s office had no immediate comment.

A 45 percent poverty rate and shrinking tax base have helped push Puerto Rico into an economic quagmire. The lawsuit represents the first chance for a judge to assess the island’s longstanding claims that it faces a humanitarian crisis and needs help from creditors.

However, the litigation could prove largely symbolic, as sides are expected to put most of their resources into consensual restructuring talks in the coming months.

Ambac insures about $1.1 billion of debt at the clawed-back agencies, while Assured wraps nearly $1.5 billion, according to the lawsuit.

Demandan los bonistas para impugnar cláusula del “clawback

Las aseguradoras de bonos Ambac Financial Group y Assured Guaranty demandaron al gobierno de Puerto Rico para detener la decisión de hacer sólo algunos de los pagos de su deuda pública, conocido como “clawback”.

En la demanda sometida en la noche de ayer, jueves, en el Tribunal Federal de Distrito en San Juan, ambas empresas impugnan la legalidad del llamado “clawback” declarado por el gobierno de Puerto Rico.

En comunicado de prensa, Ambac Financial Group informó que sometió la demanda. Assured Guaranty figura como codemandante.

En diciembre pasado, el gobierno de Puerto Rico anunció que redirigiría dinero destinado para varios pagos de deuda pública para utilizarlo en el saldo de deudas conocidas como obligaciones generales que tienen mayor protección legal.

Sin embargo, los demandantes alegan que, aunque el gobierno tiene el derecho de redirigir de dinero para hacer los pagos mencionados, “ese derecho está sujeto a condiciones previas importantes”.

“Una condición previa importante es que el dinero solo puede ser redirigido (“clawed back”) si no hay otros ingresos o dineros disponibles para hacer los pagos de obligaciones generales”, sostuvo Ambac Financial en comunicado de prensa.

“Para el año fiscal de 2016, el Estado Libre Asociado (de Puerto Rico) espera aproximadamente $9,000 millones en recursos disponibles, lo que excede bastante el servicio de la deuda pública de aproximadamente $1,500 millones”, agregó.

Según el Wall Street Journal, Ambac Financial y Assured Guaranty tienen cerca de $8,000 millones de la deuda pública de Puerto Rico que alcanza los $70,000 millones.