What would be the equivalent of Puerto Rico’s “car” that the creditors could take? Their transit system? Having been to Puerto Rico, I don’t think anyone would want that…
Some bad news. Puerto Rico just did what everyone had expected them to do; they defaulted on their bonds.
On Monday, Puerto Rico defaulted in a payment on their $73 billion worth of loans. The US territory only paid $628,000 of their $58 million payment, because its local government wouldn’t provide them with enough money to pay its creditors back.
To put all this into context, Puerto Rico basically gave someone they owe a thousand dollars to, a five-dollar-bill and a stick of Trident gum, while telling them “the ATM only let me take out five dollars due to something called ‘insufficient funds,’ so we good right?”
This really doesn’t come as a surprise to anyone since Puerto Rico has had financial troubles for the last decade. Credit services, like Moody’s and Finch, predict this to be the first of many missed payments by the US territory.
To make matters worse, Puerto Rico can’t file for Chapter 9 Bankruptcy – such as what Detroit did – in hopes to restructure their finances because it’s in that nebulous, no man’s land, of being a US territory and not a state. Puerto Rico’s Gov. Alejandro Padilla has asked the US legislature to allow Puerto Rico the ability to restructure its debts, but legislation has yet to be introduced in Congress.
You can read more about Puerto Rico’s debt crisis in our Rundown.
As for Puerto Rico itself, let’s hope Congress gives them the help they need.
Also look on the bright side Puerto Rico, at least you’re not Greece.
(Photo Credits: Wikipedia, Google Images)