Natalie Jaresko, who’s helping manage Puerto Rico’s bankruptcy process, knows more than most about the risks government borrowers can face.
The Chicago-area native lived in Ukraine for 25 years, where she co-founded a private equity firm and then served as minister of finance, overseeing the country’s debt restructuring and its International Monetary Fund program as war drained its resources. In early 2017 she agreed to move to Puerto Rico to lead the federal oversight board tasked with reducing the commonwealth’s $74 billion in debt and $50 billion of pension liabilities. Months later, Hurricane Maria slammed the island, ripping apart its electrical grid and killing thousands. Jaresko, who turns 54 in April, talked with Bloomberg News’s Michelle Kaske about how governments and investors should think about debt and risk.
MICHELLE K ASKE: How do you compare the financial crises in Ukraine and Puerto Rico?
NATALIE JARESKO: Despite the fact that Ukraine has 10 times the population of Puerto Rico, or more, the two economies are about $100 billion each. The debt stack was very similar, $74 billion, $70 billion, each. So the size of the problem was very similar. The nature of the debt is very, very different.
Sovereign debt restructuring is a little more flexible, a little more dependent on the sovereign itself, whereas in Puerto Rico there are a wide variety of rules, regulations, and laws that need to be abided by in each of the debt restructurings. Puerto Rico is just more complex in the debt stack itself. There’s secured debt, there’s unsecured debt, and there are major differences with regard to priority.
MK: And they each had catastrophes: In Puerto Rico it was a hurricane, and in Ukraine there’s the war.
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