Gov. Alejandro García Padilla of Puerto Rico said yesterday that he had ordered a debt moratorium, blocking a $422 million payment due today, the New York Times reported. The missed payment is the biggest yet in a continuing series of defaults by the struggling United States territory, and a warning that Puerto Rico will probably default on even larger and more consequential payments due on July 1, unless Congress enacts rescue legislation before then. On that date nearly $2 billion is due, roughly $800 million of which consists of general-obligation bonds that carry an explicit guarantee by the Puerto Rican Constitution. Missing a major payment on such debt would not only set off a wave of creditor lawsuits, but it could also cast a shadow over America’s $3.7 trillion municipal bond market. Read more.
What are the next steps for Puerto Rico to resolve its financial distress? A panel of experts at ABI’s New York City Bankruptcy Conference on May 12 will examine potential remedies. Click here to register.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
