PUERTO RICO Trends and Developments Contributed by: Juan Ramón Cancio-Ortiz and Cristina M García-Hall, Cancio Covas & Santiago LLP
ing debt principal and interest payments in excess of USD50 billion. Even so, the restructuring of the Puerto Rico Elec - tric Power Authority (PREPA) remains unresolved. The restructuring of PREPA’s debt, according to the Oversight Board, is a key factor in Puerto Rico’s future economic success. Despite these challenges, economic conditions on the island have begun to stabilise. Federal disaster recov - ery funds continue to inject liquidity into the economy, while employment levels and private investment have improved relative to the post-hurricane and pandemic periods. As reported by Moody’s Investor In-Depth Report, published on 5 March 2026, Puerto Rico’s non-farm employment rose to a 16-year high during 2025, despite ongoing economic obstacles. Growth in manufacturing, tourism, construction and professional services has contributed to the stabilisa - tion of economic activity. Puerto Rico’s gross domes - tic product (GDP) reached approximately USD129.4 billion in fiscal year 2025, representing an increase of about 2.6% compared with the previous fiscal year, according to the Puerto Rico Department of Economic Development and Commerce. This normalisation in the island’s economy has had a direct impact on M&A activity, shifting it away from distressed and opportun - istic transactions towards fundamentals-driven deals. Sector-Specific M&A Activity By 2026, the local M&A market, as a reflection of the shift in the island’s economic environment, is defined by infrastructure-driven transactions, nearshoring- related manufacturing investment, real estate and hospitality opportunities, and growing private equity participation. Manufacturing and life sciences As a United States territory with access to federal courts and financial systems, a highly competitive tax incentive structure, and a strategic geographic location bridging North America, Latin America and the Caribbean, Puerto Rico continues to attract capi - tal across multiple sectors. Puerto Rico’s economic structure differs significantly from other Caribbean economies. Rather than relying primarily on tourism,
the island’s economy is dominated by export‑ori - ented manufacturing. With manufacturing account - ing for roughly 46% of Puerto Rico’s GDP, making it the largest sector of the economy, it is not surpris - ing that manufacturing and life sciences are central to Puerto Rico’s M&A activity. Puerto Rico’s role as a pharmaceutical and medical device manufacturing hub remains central to its economy and its M&A envi - ronment. The island hosts significant operations for multinational pharmaceutical companies, benefiting from regulatory alignment with the United States and a well-established industrial base. Recent geopolitical and economic developments have accelerated the trend towards supply chain reshoring and nearshoring. In particular, recent US policy initia - tives aimed at reducing dependence on foreign phar - maceutical manufacturing have increased investment in domestic production capacity. Puerto Rico, with its long history of pharmaceutical industry investment, has emerged as a key beneficiary of this trend. Invest - ment promotion efforts have resulted in hundreds of millions of dollars in new capital investment commit - ments. According to Invest Puerto Rico, Inc., in fiscal year 2025 alone, economic development initiatives helped attract more than USD470 million in invest - ment commitments and produced more than 3,000 new job pledges from companies expanding or relo - cating their operations to the island. Specifically, in 2025, a major pharmaceutical manu - facturer announced a USD1.2 billion investment to expand its Puerto Rico operations as part of a broader US manufacturing strategy, underscoring the island’s strategic importance within national supply chains. Such investments often generate follow-on M&A activity, as further consolidation can play a key role in maximising long-term investment returns. Construction and infrastructure development Construction activity in Puerto Rico has intensified significantly due to the influx of federal disaster recov - ery funds allocated to the reconstruction and resil - iency of utility and essential infrastructure following hurricanes and earthquakes that affected the island in recent years. Billions of dollars in federal funding continue to finance large‑scale infrastructure projects, including electrical grid modernisation, road recon -
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