Puerto Rico's Public Finance Corp. (PFC) failed to transfer funds to pay the principal and interest on its bonds, according to the island's bank and a filing on Wednesday, highlighting cash problems as the island tries to restructure its debt.
The transfer of $93.7 million was for a debt service payment due Aug. 1 by PFC, part of the island's Government Development Bank.
"I think this puts other bond payments in jeopardy," said John Miller, co-head of fixed income for Nuveen Assset Management. "All classes of bonds, as the government has said, are in greater jeopardy of non-payment in the near term."
Puerto Rico's Governor Alejandro Garcia Padilla dropped a bombshell on creditors in June by saying the island needed to restructure debts to solve its fiscal problems, while an adviser to the island said the U.S. territory would soon run out of cash.