While all the focus is on Greece there is another government that looks like defaulting on its debts: Puerto Rico’s.
Speaking Sunday evening the island’s governor, Alejandro García Padilla, has concluded that the commonwealth could not pay its roughly $72 billion in debts. The admission will probably have wide-reaching financial repercussions, according to the New York Times.
Padilla suggests they will “probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment”.
Puerto Rico, as a commonwealth territory of the U.S., 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, according to the Times.
Much of Puerto Rico’s debt is held by U.S. investors, either through mutual funds or other investment accounts.
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