Puerto Rico's brewing debt crisis has pummeled its bonds, but so far not the more than $3.5 trillion broader municipal bond market.
That could change, however, if Puerto Rico's efforts to come to grips with its lumbering $72 billion debt result in default or other negative ramifications that trigger an investor exodus.
Puerto Rico Gov. Alejandro Garcia Padilla late Monday surprised investors when he said the commonwealth needs a restructuring plan for its debt, and he hopes to negotiate a moratorium with bond holders to postpone debt payments for a number of years. He is also pressing Washington to extend Puerto Rico rights to file Chapter 9 bankruptcy, allowed for U.S. governments but not the commonwealth.