Puerto Rico faces $355M debt payment amid economic crisis

Puerto Rico has narrowly avoided a multimillion-dollar default by announcing a last-minute bond payment.

Puerto Rico officials have not yet said where they obtained the money to make the $355 million payment due Tuesday.

This payment is for Government Development Bank for Puerto Rico bonds.

A further default from Puerto Rico, facing more than $70 billion in total debt, could trigger lawsuits, shake bond prices and would show the drastic action the government is taking to keep the island running.

Sen. Chuck Grassley, R-Iowa, chairman of the Senate Judiciary Committee, said the island’s ballooning debt is an indication of what he called “serious fiscal mismanagement”.

“Puerto Rico’s liberal-leaning politicians – who today are hosting Hillary Clinton in San Juan – have taxed and spent too much”, wrote Rubio, “and lacked the political courage and competence to pull Puerto Rico out of economic despair”. Moreover, they argue, many investors would have eschewed investing in Puerto Rico if they knew the territory would retroactively be granted bankruptcy protection.

Unless Washington acts quickly to grant Puerto Rico access to an orderly restructuring process, the results could be messier than necessary for both islanders and bondholders alike. Chuck Grassley, R-Iowa holds the gavel close while listening to testimony by Puerto Rico Gov. Alejandro Javier Garcia Padilla on Puerto Rico’s fiscal problems, Tuesday, Dec… Richard Blumenthal, D-Conn. “Congress can not tell Puerto Rico to drop dead financially”. It defaulted on $60 million for the first time in its history in August. Through its subsidiary National Public Finance Corp., MBIA insures the general obligation-guaranteed portion of the bank’s debt payment.

The country is in the midst of a financial crisis as record numbers of Puerto Ricans are moving to the U.S. Commonwealth officials say negotiations with creditors have begun as the government finalizes a five-year fiscal reform plan.

And Puerto Rico’s victory might be short lived.

Puerto Rico’s debt-ridden government is walking a tightrope trying to avoid default and, at the same time, avoid unpopular austerity measure that might further sink the island territory’s floundering economy. “We are simply requesting rule of law”, he said.