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Puerto Rico to Default on Debt Payment

Will fail to make $370 million payment Monday.

Puerto Rico will not make a nearly $370 million payment due to its creditors Monday after talks on a solution to the crisis ended without a deal, Gov. Alejandro Garcia Padilla said. In a television address Sunday, Padilla said it was a “painful decision,” but the government couldn’t pay the bonds without cutting essential services. The Government Bank Development initially owed $422 million for Monday’s payment, but the U.S. territory agreed to pay $22 million interest and reached a deal to restructure about $30 million. The missed payment could lead to more consequential defaults on general obligation bonds, which are protected by the island’s constitution. Puerto Rico and its agencies owe nearly $2 billion on July 1, including $805 million for general obligations.