Puerto Rico Risks Historic Default as Congress Chooses Inaction
- Island may impose moratorium if GDB payment isn't delayed
- Commonwealth owes GO investors $805 million on July 1
A pedestrian walks along a street in Old San Juan, Puerto Rico, on June 30, 2015.
Photographer: Joe Raedle/Getty ImagesThis article is for subscribers only.
Even if Puerto Rico manages to strike a last-minute deal to defer bond payments due in three days, the commonwealth’s financial collapse is about to enter an unprecedented phase.
Anything short of making the $422 million payment that Puerto Rico says it can’t afford would be considered a technical default. More importantly, it opens the door to larger and more consequential defaults on debt protected by the island’s constitution, and raises the risk of putting efforts to resolve the biggest crisis ever in the $3.7 trillion municipal market into turmoil.