Hedge funds and other investors met in New York Thursday to examine the implications and opportunities of Puerto Rico's growing debt crisis, including a potential debt restructuring.
Organizers of the meeting on the US territory had to reject requests to attend after reaching the capacity of 200, said Scott Greenberg, a restructuring attorney with global law firm Jones Day that hosted the meeting.
"We've had to turn away a significant amount of people in the last 48 hours," Greenberg said. "It's a hot issue."
Jones Day is a leader in bankruptcy practices, and serves as the lead counsel for the city of Detroit, which filed for bankruptcy protection last July, the largest US municipal bankruptcy to date.
The New York meeting came as concerns mount over Puerto Rico's precarious financial condition as its economy stagnates. The Caribbean island of 3.7 million has some $70 billion in debt plus another roughly $40 billion in underfunded pensions.
Jones Day's meeting was aimed at informing bondholders of their rights in case of a debt restructuring or a potential government liquidity squeeze, Greenberg told AFP before the meeting got under way.
Attendees were expected to include potential new investors who may see opportunity in Puerto Rican bonds now available on the secondary market for pennies on the dollar, Greenberg said.
"Most hedge funds that have a lot of capital to deploy (are) at least getting smart on it because it's potentially somewhere where they can put their money to work," said the lawyer.
The Puerto Rican government said Wednesday that it "will take every step necessary to continue honoring its obligations" in a statement it said it released "in response to speculation on Puerto Rico's credit."
The statement came after press accounts of the New York investors meeting, but did not name the organizer, Jones Day.
"We believe it is not unusual, as part of the normal investment process, for private investors to meet with advisors to discuss a range of issues," said the statement from the Government Development Bank for Puerto Rico.
"We did not call for, were not invited to and are not participating in this meeting," the statement said. "We made significant progress in implementing our fiscal and economic development plans in 2013 and are determined to continue that progress in 2014."
The Jones Day meeting came a day after another New York event on the Puerto Rico debt outlook, organized by the nonprofit organization the Global Interdependence Center, that drew some 160 attendees.
Ratings firm Moody's managing director Robert Kurtter, in a presentation at the nonprofit's event Wednesday, said Puerto Rico was under review for a possible downgrade.
He cited the government's weakening liquidity, its increasing reliance on external short-term debt and "uncertain prospects for growth in a persistently sluggish economy."