Puerto Rico Has Another Debt Worry on Horizon
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Alejandro García Padilla, governor of Puerto Rico, said in a televised speech in June that the island’s debt was “unpayable,” and called for a “negotiated moratorium” on the debt.CreditJoe Raedle/Getty Images
While Puerto Rico’s first bond default in its history reverberated through the financial markets on Tuesday, another move by the cash-poor island may provide a clue to where the next trouble spot lies.
After openly acknowledging on Monday afternoon that it had not made a $58 million bond payment, the government quietly disclosed in a financial filing later that afternoon that it had temporarily stopped making contributions of $92 million a month into a fund that is used to make payments on an additional $13 billion in bond debt. A small payment from the fund is due on Sept. 1.
Unlike the bond payments that went into default on Monday, the ones coming due are on general obligation bonds — the kind many investors have been led to believe would never go into default because the issuer’s full faith, credit and taxing authority stand behind them…
Puerto Rico Has Another Debt Worry on Horizon
