Photo: 
AFP
Greece in the Caribbean: Puerto Rico’s debt

Puerto Rico is expected to miss a bond payment today, the first since the island’s governor, Alejandro García Padilla, described the territory’s debts as unsustainable. The roughly $60m due is not a huge sum, but even if the money is found, it will not alter the urgent need to restructure Puerto Rico’s $72 billion of public debt. The island’s government has no easy way out: bankruptcy laws treat American territories like states, which are barred from seeking protection from creditors under chapter 9 of the bankruptcy code. A lot of bonds are held by small Puerto Rican investors, who scarcely imagined that their savings would be at risk. A default would be the largest in the history of America’s state- and local-government bond market. So far, the island’s ultimate masters in Washington, DC, have shown little interest in preventing that.

Aug 3rd 2015
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