Puerto Rico says it will default today | Emergency Preparedness | Forums

Wonder when it is going to hit the mainland.

In a television address made Sunday, Puerto Rican Gov. Alejandro Garcia Padilla said the island's Government Development Bank would not make a $422 million payment due to its creditors by the end of business on Monday, according to Bloomberg.

A Reuters report ahead of Padilla's address released Sunday evening said the GDB was "expected to skip at least the principal portion of its payment to hedge funds, credit unions, and other bondholders."

Like many financially distressed governments around the globe — think Greece, for example — Puerto Rico has been faced with demands from creditors and their consultants that the island undertake drastic spending cuts to create surpluses large enough to meet debt obligations.

The Padilla government has resisted these proposals.

And so Padilla's announcement, while not entirely unexpected, does reinforce the position from which the island will continue negotiations with its creditors over this specific debt. ZeroHedgereported Sunday that the price of the bonds on which Padilla said Puerto Rico would default had plummeted to 20 cents on the dollar.

In the financial world, Puerto Rico's distress does not come as a great shock, and many hedge funds have made considerable bets that the island will eventually reach agreements to pay back its creditors.

more http://finance.yahoo.....18113.html