Puerto Rico missed a bond payment for the first time on Saturday. Puerto Rico’s Public Finance Corp. (PFC), a government financing unit, failed to make a $58 million payment, making it more expensive and challenging for the commonwealth to borrow money in efforts to restructure its enormous $73 billion in debt, according to International Business Times.
The missed payment is the first since Puerto Rico’s governor, Alejandro García Padilla, said last month that he must pull the island out of a “death spiral,” in reference to Puerto Rico’s huge debt, budgetary deficiencies, and stagnant economy.
Puerto Rico’s $73 billion debit is nearly four times the debt owed by Detroit, reported Financial Times. Because Puerto Rico is an unincorporated territory, not a municipality, it is ineligible for Chapter 9 bankruptcy protection which Detroit sought in July 2013.
According to Morningstar Analyst Beth Foos, “…half of U.S. open-ended municipal-bond funds hold some exposure to debt of the commonwealth…funds collectively own more than $11.4 billion of the islands debt or just over 15% of its outstanding issuance,” reported Fox Business.
OppenheimerFunds Inc. has the largest number of mutual funds with the highest exposure to Puerto Rico’s debt, according to International Business News. A list of the top 30 mutual funds with the highest exposure to Puerto Rico debt is available here.
If you invested in Puerto Rico debt and experienced investment losses, please call us at 844-689-5754 or complete our “contact form.” Sonn Law Group is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.