• Commonwealth owes combined $470 million on various securities
  • General obligations and sales-tax debt will receive payments

Make no mistake about it: Puerto Rico will default in May on some of the $470 million it owes, according to Moody’s Investors Service.

The cash-strapped commonwealth is expected to fall short of paying $422 million to holders of bonds from the Government Development Bank, the credit rater said Friday in a report. It may also default on debt from the Employees Retirement System, Industrial Development Co. and Highways and Transportation Authority because the GDB has just $562 million in liquidity as of April 1, Moody’s said.

“These impending defaults would follow the government’s efforts to emphasize its severe cash depletion during the past year,” Moody’s analysts led by Ted Hampton and Emily Raimes wrote. “Even if federal oversight legislation is passed by the end of next week, Puerto Rico will still default because the commonwealth treasury and the GDB, which has long been the government’s fiscal agent, have insufficient liquidity for upcoming debt payments.”

Moody’s expects Puerto Rico to pay the less than $3 million owed to holders of general-obligation bonds and securities guaranteed by the commonwealth’s constitution to “avoid the almost certain litigation that would quickly follow.” Sales-tax backed debt, known by the Spanish acronym Cofina, will pay with funds already deposited with the trustee.

Appropriation debt from the Public Finance Corp., which accounts for 75 percent of all Puerto Rico defaults so far, will fail to pay yet again, Moody’s said.

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