The discussions will be watched closely by investors holding a few of the rest of Puerto Rico’s $72 billion worth of debt, who may end up in the same process as well.
Puerto Rico disclosed in a filing with the Municipal Securities Rulemaking Board Monday that it’s temporarily suspending monthly payments into a fund that covers its $13 billion of general-obligation debt.
Debt-ravaged Puerto Rico is in default after forking over only a fraction due in a bond payment, Moody’s said in a statement Monday afternoon. “When you’re in this kind of mess, every additional thing that helps makes a difference”, she said. “It was not consigned”.
The missed payment is seen by many experts as a significant escalation of the debt crisis facing the U.S. territory. With more defaults looming, he expects life to get a little more hard for the 3.5 million who live in the commonwealth.
“What could surprise investors is when they actually hear the word “default”, and that a default occurred”, said Lyle Fitterer, head of tax-exempt fixed income at Wells Capital Management, which holds mostly insured Puerto Rico debt.
While Moody’s does seem to be acting kinda harsh, we have to admit it would have been nice if Puerto Rico had at least included that store credit to Bed, Bath and Beyond that’s been sitting in its wallet unused for like months now.
“This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments”.
Suarez, the governor’s chief of staff, said the government had enough money to function until November unless revenue-generating plans are made and implemented.
Martin O’Malley turned the primary Democratic presidential candidate to make a marketing campaign cease in Puerto Rico this yr as a part of an effort to woo Latino voters. The island also saw high unemployment, and a large number of islanders searching for employment on the US mainland.
“Depreciation is not a possibility, but I don’t think they can do it through internal devaluation”, said Anne Krueger, a former first deputy managing director of the worldwide Monetary Fund and senior research professor of global economics at the School of Advanced worldwide Studies at Johns Hopkins.
Puerto Rico has no bankruptcy protection, the ability to restructure in order to pay off debt.
A default could open the door to a fight with investors.
“Our reading of the legal documents is that bondholders have very limited remedies”, said David Hitchcock, an analyst at S&P.
O’Malley is scheduled to leave Puerto Rico on Sunday. Moreover, they say, one reason they decided to loan money to the economically distressed commonwealth is precisely because it could not declare bankruptcy.