Puerto Rico's debt crisis just got worse

Puerto Rico is in what the governor calls a "death spiral" and "humanitarian crisis."
The island has repeatedly warned that it will have to modify its debts (either by delaying payments or else trying to get creditors to accept less than they are owed). But any restructuring without Chapter 9 or some other federal process would be very complex because the island is a territory.


Many were surprised that Puerto Rico was able to make most of the bond payments that were due on January 4, but it did that by delaying over $100 million in tax refunds and not paying government suppliers. The island even clawed back some funds that it had already paid out. Those "tricks" can't last much longer, government officials say.


Puerto Rico's economy has been contracting for a decade, and the government has been wracking up debt. Meanwhile people are fleeing the island and moving to the mainland United States in search of better jobs and pay. That only erodes the tax base on the island even more.

[link to money.cnn.com]