With all eyes focused on Greek ATM lines, collapsing Chinese ponzi schemes, and European bank implosions, one could be forgiven for forgetting about another crisis occurring closer to home. As we detailed here, Puerto Rico is now “in a death spiral” and PR bonds are collapsing this morning…
Puerto Rico’s debt is nearly half that of California for a population one-tenth the size… (via WSJ)
What happens next is unclear: “Puerto Rico, as a commonwealth, does not have the option of bankruptcy. A default on its debts would most likely leave the island, its creditors and its residents in a legal and financial limbo that, like the debt crisis in Greece, could take years to sort out.”
So without the “luxury” of default, what is PR to do? Why petition to be allowed to file Chapter 9 naturally: after all everyone is doing it.
In Washington, the García Padilla administration has been pushing for a bill that would allow the island’s public corporations, like its electrical power authority and water agency, to declare bankruptcy. Of Puerto Rico’s $72 billion in bonds, roughly $25 billion were issued by the public corporations.
Submitted by Tyler Durden
Full report at Zero Hedge
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