Puerto Rico defaulted on a $58 million bond payment yesterday, a risky move that seemed to intensify the pressure on creditors for broader debt renegotiation, but might also make future borrowing far more difficult, the New York Times reported today. Whether Puerto Rico would make the payments was a subject of intense speculation among legal and financial experts for days as yesterday’s deadline approached. Although the island made a payment on the interest of about $628,000, it said it lacked the funds to pay the full amount. Puerto Rico is carrying more than $72 billion in debt, and that has raised serious questions about its financial future. Puerto Rico’s governor, Alejandro García Padilla, has called the total debt “unpayable” and is calling for a broadly based debt moratorium; details are to be released on Sept. 1. But some big institutional bondholders are disputing the idea that a global restructuring is necessary and are warning that unilateral actions by Puerto Rico will cause disruption and pain on the island, similar to the dislocations in Greece.
