CUBA Fund Spikes As Puerto Rico Governor Says 'There Is No Money,' Expects Default
New comments from Puerto Rico governor Alejandro Garcia Padilla are moving the markets.
Shares of the Herzfeld Caribbean Basin Fund, Inc (NASDAQ: CUBA) have been rising on Wednesday, up 3.6 percent as of this writing.
Founded in 1975, the fund invests in companies that benefit from political, economic, structural and technological developments in Puerto Rico, Cuba, Jamaica, the Bahamas, Dominican Republic, Mexico and Costa Rica.
What Garcia Said
At a press conference in Washington D.C., Garcia Padilla said Puerto Rico is expected to default on its upcoming payment in either January or May.
"Puerto Rico will default in January or in May - there is no money," the governor admitted following a webcast speech on Wednesday.
"I have not a printing machine. There's no money. I have no money to provide essential services and to pay creditors. I'm always doing my best to do both things," Garcia Padilla said, according to a Reuters transcript.
The country faces a $1 billion debt payment on January 1 and a $422.8 million payment in May.
The U.S. Could Help?
In an announcement in October, Moody's said U.S. initiatives could theoretically help Puerto Rico's fiscal recovery and debt outlook.
"[T]he largest and most immediate impact would be stabilizing current federal healthcare funding on the island, which is scheduled to decline in coming years...," the firm said.
Lightening federal minimum wage requirements and an exemption from Jones Act freight restrictions are two other potential strategies, Moody's added.
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