Fitch downgrades Puerto Rico’s bond rating

Fitch Rating Services downgraded Puerto Rico bonds to default level Wednesday after the commonwealth failed to make billions in debt payments due July 1.

{mosads}The prominent agency slashed its rating for Puerto Rico’s general obligation bonds from C to D, and its rating for the commonwealth as a bond issuer from C to RD. The latter declares that Puerto Rico officially defaulted on some of its debt.

Fitch’s downgrade is another blow for the cash-strapped commonwealth, drowning in $72 billion in debt it can’t pay, suffering from a shrinking economy and failing to fund essential public services.

Puerto Rico owed $2 billion in debt to be paid by July 1 but failed to do so after months of warnings from island government officials that the commonwealth didn’t have the money to make the payment.

While relief with be slow to come to Puerto Rico, a bill signed by President Obama on Friday puts a stay on all litigation related to the island’s debt. The bill also establishes a seven-person oversight board charged with restructuring Puerto Rico’s debt.