Friday, July 31, 2015

Puerto Rico Expected to Default Tomorrow

Puerto Rico is expected to default on debt due Saturday.

Puerto Rico has indicated  that it will likely skip a $58 million payment due August 1 on its Public Finance Corporation debt.

. According to a 2014 bond offering statement, Puerto Rico has never defaulted on the payment of principal, or interest of debt, before.

The default is likely only the start of headaches for holders of Puerto Rican debt. The island government has $72 billion in debt outstanding.

PFC bonds due in 2031 are trading at 15.55 cents on the dollar.

Puerto Rico also faces a $169.6 million Government Development Bank (GDB) debt payment due Aug. 1.

Puerto Rico's chief of staff, Victor Suarez, has said the island will do "everything that is possible" to ensure that it is paid.

Suarez told reporters in San Juan on Wednesday that a missed PFC payment would not constitute default.

However, credit rating agency Standard & Poor's said it would view a non-payment on rated PFC bonds on their due date as a default. Moody's said it would also consider it a default.


(via Reuters)

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