Puerto Rico Defaults on Debt Payment for the First Time
The commonwealth paid a mere $628,000 toward a $58 million debt bill due this past Monday to creditors of its Public Finance Corporation. This will hurt the island’s residents, not Wall Street. The debt is mostly owned by ordinary Puerto Ricans through credit unions and proprietary closed-end bond funds issued by brokerage firms, including UBS AG and Santander.
The default is a historic moment in Puerto Rico’s economic “death spiral,” a term the island’s governor, Alejandro Garcia Padilla, has used. The island is struggling with about $70 billion in total outstanding debt, and its economy is in an extended recession covering most of the past decade.
The governor has put together a team to come up with a plan to restructure Puerto Rico’s debt crisis by the end of the summer. It is hitting people especially hard. Puerto Ricans are leaving the island in droves in search of jobs and stability. Unemployment is high, the economy is shrinking and the future looks shaky.
Odd are the situation will get much worse before it gets better.
The experience securities fraud attorneys at Colling Gilbert Wright are actively investigating and filing FINRA arbitrations for losses associated with marketing and sale of Puerto Rico proprietary closed-end bond funds. If you have lost money in one or more of these funds, contact our offices today for a free case evaluation.