First Free Story (1 of 3)Join Skift Pro
Hurricane Maria ripped through Puerto Rico, causing potentially billions of dollars in damage and threatening to continue the population exodus that helped push the island into bankruptcy.
Maria made landfall in the southeastern part of the U.S. territory Wednesday with winds reaching 155 miles (249 kilometers) per hour, knocking out electricity across the island. The storm flooded parts of downtown San Juan, downed trees and ripped the roofs from homes. Puerto Rico has little financial wherewithal to navigate a major catastrophe, given its decision in May to seek protection from creditors after a decade of economic decline, excessive borrowing and the loss of residents to the U.S. mainland.
The storm “just pressured that already declining population to decline a little quicker,” said Matt Dalton, chief executive officer of Rye Brook, New York-based Belle Haven Investments, which manages $6 billion of municipal bonds, including insured Puerto Rico debt.
The entire island was left without power after the storm passed over, according to Abner Gomez, director of the commonwealth’s emergency and disaster management division. Governor Ricardo Rossello declared a 6:00 p.m. to 6:00 a.m. curfew through Saturday to help maintain public order.
Maria may cause $45 billion of damage across the Caribbean, with at least $30 billion of that in Puerto Rico, said Chuck Watson, a disaster modeler at Enki Research in Savannah, Georgia. The cost to Puerto Rico could reach at least 10 percent of its gross domestic product, said Joel Myers, founder and president of AccuWeather Inc. in State College, Pennsylvania.
“It is very serious — 10 percent is extraordinary,” Myers said. “It is going to take years for some areas to recover.”
Nearly half of the island’s residents live in poverty. About 400,000 people have left Puerto Rico since 2008, a 10 percent drop, as they seek work on the U.S. mainland. It’s 10.1 percent unemployment rate is more than double the national average.
Maria threatens to further weaken the island’s aging electrical infrastructure, which was already heavily damaged by Hurricane Irma two weeks ago. Bonds issued by the Puerto Rico Electric Power Authority, which like the central government is operating under bankruptcy, traded Wednesday at an average of 51.4 cents on the dollar, down from 57 cents at the end of last month, according to data compiled by Bloomberg.
Puerto Rico’s Hato Rey financial district in San Juan, home to Popular Inc.’s headquarters and the island’s main indoor sports venue, was deluged by flooding, according to images circulating on social media.
Cars were half-submerged and tree trunks snapped in half as the streets turned into a muddy river. An aerial shot showed the flood conditions extended for blocks, if not more. Divisions of Banco Santander SA and UBS Group AG also have offices in the vicinity. Popular Inc. is by far the island’s biggest bank.
Cruise line operators rerouted ships to avoid the storm. Carnival Corp. and Royal Caribbean Cruises Ltd. sent vessels that would have stopped in San Juan to western Caribbean ports instead.
Governor Ricardo Rossello asked President Donald Trump to declare Puerto Rico a disaster zone. Rossello urged residents in a local radio interview to remain calm.
“Keep fighting, Puerto Rico. God is with us,” Rossello tweeted Wednesday after the storm hit. “We are stronger than any hurricane. Together we’re going to stand tall.”
The storm may also delay bankruptcy proceedings. The court Tuesday asked a federal oversight board that’s managing the island’s bankruptcy to confer with creditors to decide whether to postpone a planned Oct. 4 hearing or relocate it to a court in New York City, according to court documents.
–With assistance from Christopher Palmeri
©2017 Bloomberg L.P.
This article was written by Michelle Kaske, Brian K. Sullivan and Jonathan Levin from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to email@example.com.