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Puerto Rico default likely on upcoming bond payments

Published:Friday | December 11, 2015 | 12:00 AM

Puerto Rico default likely on upcoming bond payments

Puerto Rico's governor said Wednesday that it's probable the US territory will be unable to make more upcoming debt payments because it has no more money amid a worsening economic crisis.

Governor Alejandro Garcia Padilla spoke during a trip to Washington to meet with Republican legislators and others before a vote by Congress that might include a provision giving Puerto Rico public agencies access

to Chapter 9 bankruptcy

provisions.

Puerto Rico faces more than US$900 million in bond payments in January, including a US$357-million general obligation bond payment due January 1. It would be the island's first major default if the payment is not made. Puerto Rico's Public Finance Corporation already missed a US$58-million bond payment in August.

"If I have to choose on January 1 between paying the salary of Puerto Rico workers or paying bondholders, I will pay the Puerto Ricans," Garcia said. "It's that simple. They will have to go to court to force me to do the opposite."

Puerto Rico recently made a US$354-million bond payment even though officials said they were running out of money and warned of a possible government shutdown. Some investors have accused Garcia's administration of exaggerating the financial crisis to evade payment.