Puerto Rico agency defaults on bond payment for first time in $72 billion debt meltdown

The economic collapse of the Caribbean island territory of Puerto Rico begins as one agency defaulted on bonds for the very first time Monday.

The Puerto Rico government is in the midst of renegotiating its substantial $72 billion debt load. As one agency missed a full bond payment in its first default, crediting are clashing with officials.

This week, the island paid only $628,000 of what was due on securities issued by the government-owned Public Finance Corp. It occurred because the state legislature didn’t allocate enough money to cover the payment.

So how much was exactly due? The Government Development Bank (GDB) says roughly $58 million of the principal and interest was due Monday. Over the next 12 months, Puerto Rico has an estimated $5 billion of principal and interest due.

“This was a decision that reflects the serious concerns about the commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained,” Melba Acosta, president of GDB, said in a statement.

Bond prices is the Caribbean island have substantially declined as many investors believe the government won’t be able to repay what it owes. This has prompted officials to undergo an entire restructuring. But whether or not it’s successful remains to be seen.

Puerto Rico Governor Alejandro García Padilla admitted the $72 billion in debt is unpayable.

“The debt is not payable,” the governor told the New York Times. “There is no other option. I would love to have an easier option. This is not politics, this is math.”