In-debted US territory Puerto Rico on verge of default

http://www.dw.com/en/in-debted-us-territory-puerto-rico-on-verge-of-default/a-18621982

Puerto Rico has failed to make a $58 million bond payment that was due this weekend, the government has said. Its general fund will also run out of liquidity in three months if it fails to reach a deal with creditors.

In-debted US territory Puerto Rico on verge of default
01.08.2015

"We don't have the money," Gubernatorial Chief of Staff Victor Suarez told reporters on Saturday, announcing the missed payment, worth 52.7 million euros. He said the government still hoped to reach an agreement with creditors on renegotiating its debts.

It was feared for months that the Puerto Rican government would not be able to repay $72 billion in public debt.

Puerto Rico, a US territory, has accrued massive amounts of debt in the past decade as investors' fears became more acute that the government was running out of money. Its bonds were once popular with American mutual funds because they were tax-free. But, once the economy worsened, hedge funds began scooping them up as the country's credit rating dropped.

Unlike municipalities such as Detroit, in the US state of Michigan, Puerto Rico cannot declare bankruptcy because of its status as a terrtitory. This would make managing a default much more difficult.