Company: OIA
Filing Date: 2025-02-07
Form Type: N-2/A
Source: 0001104659-25-010545
Chunk: 170

Company: Invesco Municipal Income Opportunities Trust
Filing Date: 2025-02-07
Form: N-2/A
Chunk 170
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 Governor of Puerto Rico had declared the debt unpayable, and the Puerto Rico Government was in default. Decades of economic decline and chronic financial mismanagement left Puerto Rico in crisis, soon exacerbated by natural disasters, including Hurricanes Irma and María in 2017, earthquakes, and the global COVID-19 pandemic in 2020. According to a U.S. Government Accountability Office (GAO) report from 2018, the causes of the crisis were: (i) inadequate financial management and oversight practices, such as the overestimation of potential revenues and persistent spending in excess of appropriated amounts; (ii) prolonged economic contraction, impacted by outmigration and resulting diminished labor force, the high cost of energy and importing goods, regulatory challenges to doing business, the phaseout of the possessions tax credit, and banking and housing struggles; and (iii) policy decisions, such as allowing the use of debt proceeds to balance budgets, insufficiently addressing public pension funding shortfalls, and inadequately managing the financial condition of the Puerto Rico Electric Power Authority (PREPA). Prior to PROMESA and for each of the first 16 consecutive years of this century, from fiscal years 2000 to 2016, Government spending exceeded recurring Government revenues. Controls and guardrails, to the extent they existed, were insufficient to prevent overestimation of revenues, excessive borrowing, overspending, and the deficits that eroded Puerto Rico’s economic stability. Before PROMESA, Government pensions were not sufficiently funded, putting pension payments for current and future retirees at risk. C-2 As result of these practices, the consolidated Commonwealth’s outstanding debt and pension liabilities had grown to over $120 billion – with more than $70 billion in financial debt and more than $50 billion in pension liabilities – an amount almost twice the size of Puerto Rico’s economy. The Oversight Board was established oversee the Commonwealth’s financial operations and allows the Commonwealth and its instrumentalities, with approval of the Oversight Board, to file cases to restructure debt and other obligations in a “Title III” proceeding. U.S. territories do not have the ability to file for bankruptcy under the federal Bankruptcy Code. Title III incorporates many provisions of the federal Bankruptcy Code, and incorporates legal mechanisms for a litigation stay and restructuring of pension and debt obligations, among other provisions. Title III petitions were filed for, among others, the Commonwealth, the Puerto Rico Sales Tax Financing Corporation (COFINA), and PREPA, three of the largest issuers of Commonwealth debt. It is possible that petitions under Title