Puerto Rico debt crisis is lesson for Guam, officials say

by | Jul 13, 2016 | Bocaítos | Comments

The problems of Puerto Rico present a lesson to officials from the other US territories, particularly Guam. The lessons come not only as foresight as to what might happen should they follow a similar path, but because of its immediate consequences.

Puerto Rico’s debt crisis could make Guam’s future borrowing more expensive if investors’ jitters over the Caribbean island’s finances result in higher interest rates for Guam’s bonds, Cruz said.

Two years ago as Puerto Rico’s debt problems were simmering, a municipal bond market expert, Matt Fabian of Municipal Market Advisors, suggested that investors should consider selling their Guam and U.S. Virgin Islands bonds, Barron’s reported. The U.S. Virgin Islands ranks No. 3 of territories’ per capita indebtedness with $8,632 of debt per person.

Fabian made the suggestion to sell Guam and Virgin Islands bonds before the market realizes the potential risks of repayment.

Unfortunately there was no prior example for Puerto Rico to learn from. Although perhaps, that should not be a requirement for good governance.