S&P downgrades Puerto Rican bonds after default

Standard & Poor’s Rating Services dealt a blow to cash-strapped Puerto Rico on Tuesday, downgrading infrastructure bonds secured by rum taxes to default status, according to Reuters.

{mosads}The downgrade comes one day after the Puerto Rico Infrastructure Financing Authority defaulted on a $35.9 million interest payment. Puerto Rico Gov. Alejandro García Padilla (D) warned last week that the commonwealth would miss that payment and another $1.4 million payment to its Public Finance Corp.

Puerto Rico, with almost $1 billion in debt, faces a dire financial crisis. Island leaders pleaded with Congress for relief in last month’s omnibus spending bill, specifically for power to declare bankruptcy, but to no avail.

Sen. Orrin Hatch (R-Utah) blocked a bill offered by Sen. Chuck Schumer (D-N.Y.) last month giving Puerto Rico access to bankruptcy courts, which would have allowed the commonwealth to restructure its debt. Schumer warned of widespread problems if Puerto Rico’s crisis isn’t solved, but Hatch, the Senate Finance Committee chairman, objected and said Schumer’s plan wasn’t an efficient solution.

“I don’t know of anyone in this chamber who is indifferent to the issues facing our fellow American citizens in Puerto Rico,” Hatch said. “I agree with the senior senator from New York that Congress must act to address these problems.”

One day after the omnibus spending bill passed, Speaker Paul Ryan (R-Wis.) committed to a “responsible solution” for Puerto Rico by March 31. 

–This report was updated at 3:11 p.m.