Puerto Rico announced a historic restructuring of its public debt
on Wednesday, touching off what may be the biggest bankruptcy ever in
the $3.8 trillion U.S. municipal bond market.
While it was not immediately clear just how much of Puerto Rico’s $70
billion of debt would be included in the bankruptcy filing, the case is
sure to dwarf Detroit’s insolvency in 2013.
The move comes a day after several major creditors sued Puerto Rico over defaults its bonds.
Bankruptcy may not immediately change the day-to-day lives of Puerto
Rico’s people, 45 percent of whom live in poverty, but it may lead to
future cuts in pensions and worker benefits, and possibly a reduction in
health and education services.
The island’s economy has been in recession for nearly 10
years, with an unemployment rate of about 11.0 percent, and the
population has fallen by about 10 percent in the past decade.