Puerto Rico avoids loan default by dipping into cash reserves

by Michael A. Fletcher  |  published on January 1, 2016

Puerto Rico will skirt a catastrophic default on the vast majority of more than $1 billion in bond payments due in early January, an outcome that required island officials to raid cash set aside to pay other debts.

The financial maneuvers will allow the cash-strapped territory to escape default on all but $37.3 million owed to creditors, a relatively small default that marks the second time since August that it will have missed a bond payment.

The moves allow Puerto Rico to buy time as officials hope Congress will help restructure its staggering debt burden. But with the island suffering from a decade-long recession that has shrunk tax revenue and ignited a large migration to the mainland, officials said major defaults loom in May unless lawmakers give the territory an orderly process for restructuring its debt.

  • CharlieSeattle

    Not to worry. Once Hillary is indicted and bows out.

    Marco Rbio and Jeb Bush can switch parties and easily get the Democratic nomination.

    That will please their donors because they will not have to change any policy positions!

  • ADRoberts

    Have they figured it out yet? Apparently; not. Deficit spending is NEVER the answer. And if you haven’t figured that out yet, take the example of me and my sister. She decided that if she was ever going to have anything, she had to buy it now ON CREDIT. So she is dead now. And when she died, she was still in debt and had almost nothing. The house was still not paid off after many decades and the car, one from the 80’s was still taking payments.
    ME? Let’s just say that I have a good house that I can pay off, cars that are free and clear. And I have not paid a fortune to MONEY people in interest.
    The same is true of government as it is people or businesses. When you borrow, as businesses do, you are gambling about whether you can pay it back. Businesses MIGHT be able to make a profit and do so. Governments? Not so much. And what happens when they default? Can you say DETROIT.

    And if it were not for the liberals in Washington, stepping in to cover the gap, a lot more cities and states will be down the tubes.
    SO what happens when the government loses the confidence of the people?
    It is called COLLAPSE and that is when the paper money becomes worthless.
    Think about that for a while.

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