Puerto Rico defaults on multimillion-dollar debt amid crisis

As should have been expected by anyone who has been paying attention, Puerto Rico has partially defaulted once again. The crisis is obviously too complicated to solve in one month of the new administration to expect a solution by now.

The government said it missed $312 million worth of bond payments including $279 million owed by Puerto Rico’s Government Development Bank, which oversaw debt transactions until falling into a fiscal state of emergency itself. Officials warned the bank only has about $156 million in liquidity.

The government said the remaining payments missed involve general obligation bonds backed by the island’s constitution and those issued by Puerto Rico’s public finance and infrastructure agencies.

However, the U.S. territory paid $295 million worth of interest due on some debt, including a portion backed by a local sales tax and on bonds issued by agencies including the Aqueduct and Sewer Authority and the Highways and Transportation Authority, according to spokesman Elliot Rivera.

Both Gov. Ricardo Rossello and his predecessor have favored payments to those holding bonds backed by a local sales tax versus general obligation bondholders.

“It’s very difficult to please everybody,” said economist Vicente Feliciano, noting that a federal control board that oversees Puerto Rico’s finances is seeking to set aside $800 million for debt payments when more than $3 billion will be due in upcoming years.

The board recently extended a litigation stay to May 1 that protects the island from creditor lawsuits amid ongoing defaults. It also extended a deadline for Puerto Rico to submit a revised fiscal plan expected to contain several new austerity measures.

Rossello signed a new law this week that calls for partial debt payments if there is any money left over after providing essential government services, including education, health and security.

Conversations between the government and creditors are ongoing, and for now, the territory remains protected from litigation from lawsuits for its defaults. Unfortunately, the end of the crisis is nowhere near sight.