Puerto Rico Announces Bankruptcy – The Biggest in US Government History
May 4 , 2017
As per reports, the bubble has burst for Puerto Rico with the local government announcing it had filed for bankruptcy. With over $70 billion in debt, creditors were threatening to sue the Puerto Rican government, forcing it to immediately file for debt restructuring under bankruptcy laws.
The filing goes past Detroit’s bankruptcy in 2013 that was in the range of $18 billion. The exposure for Puerto Rico is much larger though it was still unclear how much of the total debt of $70 billion would be included as part of the restructuring.
Puerto Rican economy has been in recession for the last ten years and further compounded by high unemployment (11%) and a declining population. It now remains to be seen how the Federal Reserve responds to the current crisis.