Puerto Rico dodges default in January after 'extraordinary' effort

Puerto Rico's Government Development Bank announced Wednesday that the U.S. territory would make "all scheduled principal and interest payments" due January 1, avoiding the risk of default for another month.

The development bank said it would make an estimated payment of $434 million, and said that was made possible in part by an Executive Order allowing the territory to use "available revenues" to help pay off its $72 billion debt. The bank said $164 million has been directed to making debt payments under the executive order.

Bank President Melba Acosta Febo said Puerto Rico was making an "extraordinary effort" to prioritize its debt payments, in the hopes of reaching some agreement with its creditors in the coming months. But she warned that Puerto Rico is running out of options.

"[T]he use of over $100 million in reserved funds to make debt service payments for several of the Commonwealth's issuers should underscore that the Commonwealth is running out of options to pay its debt," she said. "Further sacrifices and extraordinary financial measures undertaken by the Commonwealth alone, without the participation of other stakeholders, will not be sufficient to avoid a default even on our public debt, let alone enable the economy to grow to the point where the Commonwealth's creditors have a realistic chance to be repaid over the long run."

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