Puerto Rico avoids second default, but future payments uncertain

NEW YORK/SAN JUANCity, Safar 19, 1437, Dec 1, 2015, SPA — Puerto Rico avoided a default on debt maturing on Tuesday but warned that its deteriorating liquidity meant that future defaults loom.

There had been speculation that the U.S. territory would default on all or part of the $355 million notes issued by its financing arm, the Government Development Bank, Reuters reported.

While Puerto Rico first defaulted in August, failure to make the payment on Tuesday would have been more significant because part of that debt was protected by the commonwealth’s constitution.

Another default could have triggered lawsuits, further spooked investors and undermined the island’s efforts to climb out of $72 billion in debt.

Moody’s ratings agency said in a statement that the bank’s payment does not change Moody’s ratings or outlook for Puerto Rico’s debt.
21:43 LOCAL TIME 18:43 GMT