Puerto Rico, which is battling a financial crisis of high unemployment and a crushing debt load, is under pressure to show investors and credit-rating agencies that it can still borrow money from the capital markets, the New York Times DealBook blog reported yesterday. Bankers at Morgan Stanley have been reaching out to about a dozen hedge funds, private equity firms and other large investors to gauge their interest in providing up to $2 billion in financing to Puerto Rico. The talks are fluid, but some sources say that the debt could carry yields as high as 10 percent, more than double what a highly rated city or state pays to borrow in the current municipal debt market. As Puerto Rico is a U.S. territory, it does not have the ability to file for chapter 9 protection.
