The government of Puerto Rico missed a $422 million payment Monday. But that may not be the only default for the Puerto Rican government in the foreseeable future.
Puerto Rican Governor Alejandro Garcia Padilla warned Tuesday of coming defaults if it doesn’t receive a bailout from the United States Congress. As the island territory’s financial crisis deepens, the governor said that a large number of defaults could commence starting in July, which could generate chaos for bond investors.
All of this could be avoided, however, if Congress passes legislation that provides the territory with a bailout as it restructures it $70 billion worth of debt. What Padilla is referring to is the $2 billion owed on July 1, including $805 million in GOs. This is a bigger deadline the market should be worried about.
So far, Puerto Rico has missed more than $600 million of payments on appropriate bonds.
To date, the island territory has accumulated $70 billion as it presented 16 consecutive budget deficits and issued new debt to pay for its government obligations and expenditures (SEE: 5 reasons why the economic collapse of Puerto Rico happened).
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