Puerto Rico halted deposits into the fund that pays its general-obligation bonds and one of its agencies defaulted for the first time, marking an escalation in the island’s fiscal crisis.
Puerto Rico disclosed in a filing with the Municipal Securities Rulemaking Board Monday that it’s temporarily suspending monthly payments into a fund that covers its $13 billion of general-obligation debt.
The announcement came after the Caribbean island paid just $628,000 of what was due on securities sold by its Public Finance Corp. because the legislature didn’t provide enough money, Melba Acosta, the president of its Government Development Bank, said in a statement. About $58 million of interest and principal was due.
“This was a decision that reflects the serious concerns about the commonwealth’s liquidity in combination with the balance of obligations to our creditors and the equally important obligations to the people of Puerto Rico to ensure the essential services they deserve are maintained,” Acosta said in a statement.
Puerto Rico bond prices have tumbled amid speculation that the island won’t be able to repay what it owes as its economy stagnates and residents leave for the U.S. mainland.
It has about $5 billion of principal and interest due over the next 12 months, according to data compiled by Bloomberg.
Puerto Rico securities have been trading at distressed levels for two years. General obligations maturing July 2035 and originally sold in March 2014 at 93 cents on the dollar traded Monday at an average price of 69.3 cents on the dollar, data compiled by Bloomberg show. The average yield was 12.1 percent.