In a television address on Sunday, Puerto Rico's governor Alejandro Padilla said the island's Government Development Bank (GDB) will not make a $422 million payment due to its creditors by the end of business on Monday.
Like many financially distressed governments around the globe — e.g. Greece — Puerto Rico has been faced with demands from creditors and their consultants that the island undertake drastic spending cuts in order to create surpluses large enough to meet debt obligations. The Padilla government has resisted these proposals.
ZeroHedge reported Sunday that the price of the bonds on which Padilla said Puerto Rico will default had plummeted to 20 cents on the dollar.
GDB held talks with groups holding some of its $4 billion in bonds to try to restructure the debt consensually. Some creditors who are frustrated with Padilla's administration — which has not issued audited financial statements since 2013 — say government reforms could allow the island to pay its debts without hurting its people.
Padilla insists the island (a US territory) requires relief from debt payments. A default would ratchet up pressure on the U.S. Congress to find a legislative solution for Puerto Rico, which owes another $1.9 billion of debt on July 1.
However, draft legislation, which would put Puerto Rico's finances under federal oversight and allow it to restructure debt through a bankruptcy-like process, has faced opposition from liberal and conservative wings of both parties.
Nice to see even the US has a Greece
Puerto Rico to Default Watch
- Thread Starter
Last edited by FriendlyPenguin; 02-05-2016 at 07:59.
- 02-05-2016 07:54
- 02-05-2016 07:59
For anyone who is intersted in this, and wants a quick lazy version without reading:
- Thread Starter
- 02-05-2016 08:01
- 02-05-2016 12:51
The USA will default soon,