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Puerto Rico will default on about $37 million in bond payments due Jan. 1 and divert revenue to make others, escalating a conflict with investors as Governor Alejandro Garcia Padilla seeks to restructure a $70 billion debt burden. The amount is a fraction of the almost $1 billion in interest due at the start of the year. The island will miss payments on $35.9 million of non-commonwealth guaranteed Puerto Rico Infrastructure Financing Authority debt and $1.4 million of Public Finance Corp. bonds. The money is being used to help pay investors who are owned $328.7 million of interest on general-obligation debt. Garcia Padilla has warned for weeks that if forced to choose between paying creditors and paying for essential services, he would favor his people. A skipped general-obligation payment would have marked a turning point in Puerto Rico’s debt crisis because the securities are considered to have the strongest legal protections among the island’s different issuers. The commonwealth’s c

Puerto Rico is just days away from the biggest municipal bond default in U.S. history, and Congress is doing nothing to stop it. The U.S. territory faces a January 1 deadline to pay bondholders around $1 billion, a fraction of the $72 billion it owes overall. Puerto Rico has warned it will be unable to make at least some of its upcoming payment, and what it can pay could be drawn from funds it doesn’t actually have. Congress could have prevented a default, but passed on their opportunity earlier this month. The governor of Puerto Rico has complained to the United Nations that the United States is backtracking on its promises of self-government on the island. We are joined by Edwin Meléndez, professor of urban affairs and planning at Hunter College and the director of the Center for Puerto Rican Studies, as well as Democracy Now! co-host and New York Daily News columnist Juan González, who has extensively covered the Puerto Rico debt crisis. TRANSCRIPT This is a rush transcript. Copy m

Puerto Rico will default on a portion of the nearly $1 billion in debt obligations due to its bondholders on Jan. 4. Top officials for the commonwealth have confirmed that it will not be able to make two out of the 13 total payments due Monday to bondholders. Puerto Rico will default on a $35.9 million payment on the Puerto Rico Infrastructure Financing Authority, and a $1.4 million payment on the Puerto Rico Public Finance Corporation. The remaining bonds will be paid, including $329 million due to general obligation bondholders, in which half of the payment, $163 million, is from the revenues clawed back from the Highways & Transportation Authority, the Infrastructure Financing Authority and the Convention Center District Authority bonds. On Nov. 30, Puerto Rico Governor Alejandro Garcia Padilla enacted an unprecedented executive order to implement a "clawback" measure that would redirect money pledged to select tax-supported bonds in order to meet the GO obli

Puerto Rico will default for the second time in five months, but will pay the bulk of $1 billion due on Jan. 4, including its most senior debt, Governor Alejandro Garcia Padilla said on Wednesday. The Caribbean island's biggest payment, $328.7 million in general obligation debt, will be paid, the governor told reporters at a press conference in San Juan. More than half of that payment was made by taking revenues from other commonwealth agencies, he added. A default on general obligation (GO) debt would have been seen as a more serious stumble because those bonds have the strongest legal protections of any of the island's obligations. However, it also keeps alive the drama surrounding its deteriorating finances and $70 billion debt load as investors wait for the next shoe to drop. The default opens the door to potential litigation from affected creditors, while the island must now turn its focus to trying to achieve a consensual debt restructuring with GO holders before its

There's no "Happy New Year" for Puerto Rico. Puerto Rico will default -- again -- on some of its bonds payments. The island owes about $1 billion to creditors on January 4. Governor Alejandro García Padilla said Wednesday that the island will make all payments except for $37.3 million. He claims the debts that will go unpaid were never guaranteed by Puerto Rico and the creditors should know this. It will be the second default in the island's history. The first default occurred in early August . Puerto Rico is trying to figure out how to deal with about $73 billion in debt. Governor Padilla has called it a " death spiral " for the island. The economy is in recession and people are migrating to the mainland U.S. at a rate not seen since the 1950s "West Side Story" era. "We're out of cash," Governor Padilla recently told CNN . Puerto Rico blames Congress The governor blames Congress for failing to act in time to aid Puerto Ric

Running out of both time and money, debt-ridden Puerto Rico appears headed for default on at least some of the roughly $1 billion in bond payments that are due on Jan. 1. It is possible, the island’s leaders have suggested in official filings, that enough cash can be found to pay about $330 million due on general obligation bonds — those given top priority by Puerto Rico’s Constitution — but only by diverting cash from other types of bonds. A failure to make payments due on those would leave a mysterious hierarchy of bondholders in a legal quandary over whether to sue now or hope for some payment, even a lower one, down the road. Even the United States Treasury secretary, Jacob Lew , said this week it was “inevitable” for Puerto Rico to start missing bond payments, although he said the coming defaults would not necessarily all happen Jan. 1. “Look, they’re effectively in default” already, he said in an appearance on Fox Business Network on Monday. “They’ve already been taking money ou

Mayday. This is a distress call to Congress from the people of Puerto Rico. The commonwealth of Puerto Rico is experiencing the worst financial crisis in its history. The decades-in-the-making crisis began in 1996 when Congress repealed economic incentives to American businesses on the island, sending hundreds of thousands of American jobs abroad. Now, this has evolved into a humanitarian crisis with devastating effects rippling across the U.S. capital markets. In times of calamity people flee, and Puerto Rico is seeing a historic level of emigration , typically only seen after catastrophic natural phenomena or armed conflicts. <img alt="Alejandro García Padilla" class="media__image" src="http://i2.cdn.turner.com/cnnnext/dam/assets/151217160333-garca-padilla-headshot-large-169.jpg"> Alejandro García Padilla That migration threatens to throw the island into a death spiral, crippling its economy even further and ever reducing it

Puerto Rico , an island U.S. territory facing a sea of red ink, has become an unlikely flashpoint in Congress ‘ end-of-year scramble to fund the government for fiscal year 2016. Democrats fumed Thursday, saying it is unconscionable that Congress failed to include language in the year-end spending bill allowing Puerto Rico to declare bankruptcy and restructure its debt. By Tom Howell Jr Puerto Rico bankruptcy plea raises Democrat argument on spending bill in Congress

The White House on Thursday called for "common sense steps" to help Puerto Rico claw out of its fiscal crisis as it welcomed a commitment by the leader of the U.S. House of Representatives to consider legislation to help the debt-strapped commonwealth. "We certainly are gratified that the speaker has committed to bringing up legislation early in the new year to give Puerto Rico access to an orderly restructuring regime," White House spokesman Josh Earnest told reporters. House Speaker Paul Ryan said on Wednesday he had instructed committees to work with Puerto Rico's government to come up with a solution to the island's financial woes, calling for a plan to be crafted by the end of March. Alvin Baez | Reuters Harold Lopez (R) reads a newspaper with the newspaper headline "Government cuts" while riding on the metro train in San Juan, Puerto Rico. White House calls for 'common sense steps' to help Puerto Rico

The Federal Reserve announced Wednesday that it is raising its benchmark interest rate, putting downward pressure on job creation in order to address long-term concerns about inflation and financial stability. The central bank’s Federal Open Market Committee decided to raise the target federal funds rate -- or the interest the Fed sets for banks to lend to one another overnight -- one-quarter of a percentage point to a range of 0.25 percent to 0.5 percent. Fed officials expressed confidence that the job market is finally growing enough that it will soon put upward pressure on prices. "The Committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise, over the medium term, to its 2 percent objective," the FOMC said in its official statement . Speaking at a press conference after the announcement, Federal Reserve Chairwoman Janet Yellen said that if the Fed were to wait much longer