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Puerto Rico Will Default on Government Development Bank Debt



U.S. territory won't make full $422 million payment on debt
Moody's, S&P deem GDB in default under creditor agreements

Puerto Rico will default on a $422 million bond payment for its Government Development Bank, sending its clearest signal yet to investors and U.S. officials that it doesn’t have enough money to keep paying its debts.

Governor Alejandro Garcia Padilla imposed a new debt moratorium law, the island’s chief executive said during a televised address Sunday. The bank, operating under an emergency period, will miss the $422 million payment due May 1, he said. The bank had until late Monday to make the payment.

No matter which route Puerto Rico took, credit-rating companies saw a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes. S&P Global Ratings said a distressed debt exchange or temporarily withholding interest is synonymous to default.

http://www.bloomberg.com/news/articles/2016-05-01/puerto-rico-will-default-on-government-development-bank-debt