Puerto Rico is set to register its largest default to date on Friday as $2 billion in debt payments are due to the financially strapped island's creditors.
The payments include more than $1 billion in general obligation bonds, the island's highest tiered credit that carries a constitutional lien on revenues.
The largest default prior to this was on May 2 when the Government Development Bank, which formerly acted as the island's primary fiscal agent and lender of last resort, defaulted on $367 million due to its bondholders.
Governor Alejandro Garcia Padilla issued two executive orders Thursday suspending payments on the general obligation bonds and declaring a state of emergency at several of the island's agencies in order "to ensure the residents of Puerto Rico continue to receive essential services while the Commonwealth continues to face a delicate financial situation," according to a statement issued by the Governor's office.
The executive orders were issued around the same time President Obama was signing a bipartisan bill—The Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA—into law that the U.S. Senate had scrambled to pass ahead of the looming July 1 debt deadline.