Puerto Rico to miss payment, default looms
Staggered by a $72 billion debt load, Puerto Rico was likely to miss a debt payment due Saturday, setting the stage for what could be one of the largest U.S. municipal debt restructurings.
Puerto Rico's government said Friday it would not make a $58 million bond payment due over the weekend.
"We don't have the money," the governor's chief of staff, Victor Suarez, said at a news conference on Friday. He added that the government still hopes to renegotiate its debts with creditors.
A payment due over a weekend can be made by the end of business on Monday. A missed payment would be considered a default by investors.
The bonds are issued by Puerto Rico's Public Finance Corp., which has sold $1 billion of debt.
Bloomberg reported the non-payment is Puerto Rico's "warning shot to investors that officials aren't afraid to default."
Puerto Rico Gov. Alejandro Garcia Padilla said in June that the island could not pay its debt of $72 billion and would need to restructure.
Treasury Secretary Jacob Lew has said there is no discussion of a federal bailout.
The failure to pay on debt would be the highest profile since Detroit, which defaulted on $1.45 billion of insured pension bonds before filing for bankruptcy in 2013.