Puerto Rico faces historic $72B default

Pedestrians walk past a shuttered business in San Juan, Puerto Rico.
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Pedestrians walk past a shuttered business in San Juan, Puerto Rico.

Puerto Rico appears lunging even closer to default, after one of the commonwealth's financing agencies failed to make a $93 million cash transfer to cover an August 1st debt payment.

Public Finance Corp, which provides financing to the island's agencies and is a subsidiary of Puerto Rico's Government Development Bank, did not transfer funds to pay the principal and interest on its bonds.

A U.S. territory, Puerto Rico currently has about $72 billion in debt outstanding

Last month, Governor Alejandro García Padilla called for negotiations with bondholders because the commonwealth is not able to pay its debts.

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Over the past few years some of the top-performing municipal bond funds have taken massive huge stakes in Puerto Rico's debt.

According to mutual fund research firm, Morningstar, U.S. bond funds hold an estimated $11.3 billion total exposure.

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Sixteen of the 20 funds are members of the OppenheimerFunds' Rochester Group,.

Last month Rochester Funds Municipals, the largest fund in the Rochester group $1.3 billion in assets, had more than a quarter of its portfolio invested in Puerto Rican debt. The fund experienced a 1.8 percent drop in net asset value in June.

Hedge funds are also active investors in Puerto Rico's debt, and a group holds an estimated 40 percent or about $3 billion of Prepa bonds.

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On Wednesday,Federal Reserve Chairwoman Janet Yellen said the central bank would steer clear Puerto Rico's municipal debt crisis, leaving any potential government intervention to Congress.

"What we have been doing is monitoring developments in Puerto Rico," Yellen said. "We are looking to see are there risks that are being transmitted to the broader municipal debt market and we're not seeing signs of contagion."

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U.S. lawmakers continue to weigh possible legislation to grant Puerto Rico rights to file Chapter 9 bankruptcy. It is now allowed for U.S. governments, but not in the commonwealth.

So is there a road out to the debt crisis?

Luis Fortuño served as Puerto Rico's governor from 2009 throuigh 2013.and he told CNBC's "Power Lunch Thursday "The markets and a lot of people in Washington believe that Puerto Rico's system risk is just not there."