Puerto Rico will default on a $422 million bond payment for its Government Development Bank, sending its clearest signal yet to investors and U.S. officials that it doesn’t have enough money to keep paying its debts.
Governor Alejandro Garcia Padilla imposed a new debt moratorium law, the island’s chief executive said during a televised address Sunday.
The bank, operating under an emergency period, will miss the $422 million payment due May 1, he said. The bank had until late Monday to make the payment.
No matter which route Puerto Rico took, credit-rating companies saw a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes.
S&P Global Ratings said a distressed debt exchange or temporarily withholding interest is synonymous to default.
(c) 2016, Bloomberg · Michelle Kaske, Jonathan Levin–With assistance from Alexander Lopez
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As the Committee on Natural Resources continues its work on a plan to responsibly address Puerto Rico’s fiscal crisis, Speaker Ryan took to the airwaves on CBS This Morning to explain the issue to the American people:
“We are focused on Puerto Rico. . . . Here is what we are working on doing: Having a very important oversight board to work on debt restructuring and helping Puerto Rico get their fiscal house in order. Taxpayers will not be involved in this. There will be no taxpayer bailout of Puerto Rico. But we will give the tools that are necessary to bring order to this chaos in Puerto Rico so that they can have a smooth landing, so that they can put their fiscal house in order, and so that they have the necessary tools they need—which they need in law—to be able to restructure this paralyzing debt that they have. . . . and it will make them have to balance their budget.”
