Puerto Rico to default

Puerto Rico to default

Puerto Rico will miss a payment on debt due August 1, the governor’s chief of staff said on Friday, an event that will be considered a default by investors as the commonwealth lurches towards what could be one of the largest US municipal debt restructurings in history.

The missed payment will mark the first default by the commonwealth and shows the depth of the island’s economic and cash flow problems. Puerto Rico Gov. Alejandro Garcia Padilla shocked investors in June when he said the island’s debt, totaling $72 billion, was unpayable and required restructuring. …

“Tomorrow is Aug. 1 and we don’t have the money,” Victor Suarez, chief of staff for Puerto Rico’s governor, told journalists in San Juan, referring to a $58 million payment due on Public Finance Corporation (PFC) bonds. …

The nonpayment would be the most notable since Detroit, which had about $8 billion of bonds, defaulted on $1.45 billion of insured pension bonds before it filed for bankruptcy in 2013.

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