Puerto Rico’s government argues the missed payment should not be considered a default under a technical definition of the term. Moody’s ratings agency and others have rejected the claim.
The problem is that Puerto Rico’s tourist economy has been on a downturn while the rest of the islands in the Caribbean have been ramping up. So basically it could not keep up with it’s rivals.
“This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments. This is a first in what we believe will be broad defaults on commonwealth debt.” ~Moody’s vice president Emily Raimes
The Governor, Alejandro Garcia Padilla was to give Puerto Rico public agencies the right to file for bankruptcy. The reason for this is that the administration feels that would help with an orderly restructuring of the territory’s debts. While that sounds legit. The proposal will and has had a very hard time winning any backing in the Republican led US Congress. The other side of the political line is not much better. The White House said there are no plans for a federal bailout. There is not much more the island do. It already raised it taxes. It has had pension reforms and deep spending cuts.
http://youtu.be/2_xpRsI9BfE