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percent inclosed at forty seven seventy five. West Texas Intermediate crude oil down eight cents of barrel to spot, gold up thirty cents an ounce to twelve ninety and the tenure treasury down to thirty seconds with the yield of one point eight three percent. And that's a Bloomberg Business flash. You're listening to Taking Stock with Kathleen Hayes and Pin Fox on Bloomberg Radio. Puerto Rican Governor Alejandro Garcia Padilla has said this week that there will be at default
on Monday. He added that I don't think there is a deal on the table that avoids a default, So what will happen. That's why we have Brian Chappatta in his municipal bond reporter for Bloomberg News. You can follow him on Twitter at be Chapatta. Brian, welcome to the studio, Thanks for coming in, Thanks for having me. All right, you got you, Christo, Paul, Oh, it's an easy it's an easy called. I mean, the governor said that Puerto
Rico is gonna default. They are going to default. It's just sort of a matter of how they're going to default. The idea how they're going to default, what the fallout is going to be from the default, like a well, the governor has the debt moratorium that he passed earlier this month at his disposal. That law allows him to just say we're not paying anymore effective immediately, so that's
one route that they can take. There have been talks between creditors and the Government Development Bank in terms of a forbearance agreement or doing something in order to put off payments. Um, there's been no formal announcement yet that those have materialized and they've gotten agreements in place. But even if they have an agreement for a forbearance with creditors, the credit rating agencies still say this is a default
because you're not making your full payment on time. Just to give detail to the numbers the creditors, seventy billion dollars that's the debt that that's the full debt. Four d and twenty two million is what was supp is to be paid on Monday, that's right, and that's on the Government Development Banks bonds. It's the fourth largest issuer of bonds on the island, with a little over seven
billion dollars of bonds out there. So it would be in terms of the size of an issuer, it will be the largest Puerto Rico issuer to default so far. So far they've been relatively small authorities. Is there any update from the US Congress such as how Speaker Paul Ryan, I mean, this has been going on for three months. In fact, he asked them to put together what he called a responsible solution. Have the Democrats and the Republicans
gotten together on this? Uh? They have a little bit there in recess right now, so nothing's gonna materialize until at least after May tenth, and there's a lot of talk that nothing might get done until they're backed up against another deadline, which would be July one. UM. There's also been conversations from Bishop who uh is spearheading this UH in Congress, saying that we're not that far apart um. There's just some small changes that need to be worked on.
But it does seem like you know, you mentioned Paul Ryan, he's put a lot of political capital into this to
making sure it gets done. So between him and Pelosi, it seems like they are going to try to reach some sort of solution, but it won't be enough to stop this May first default will it be enough to stop at the fault on July the first, because I understand that Puerto Rico owes two billion dollars then, and not just two billion dollars, but it's a lot of payments on their general obligation bonds, which are supposed to
be Sacker saying to guaranteed under the Commonwealth Constitution. That's right, So that's gonna be the real interesting date. Um. This one has been telegraphed for a little while. I mean the governor said even back in December, we're gonna miss payments neither January or May. So he was sort of telegraphing this for a while. But uh yeah, the general obligation bonds, as you say, a Commonwealth guaranteed. Uh So, missing those would definitely open up a new can of
worms for everyone involved. You have to open up that constitution. At this same time, Puerto Rico's economy is struggling. They are now dealing with an outbreak, or at least a potential outbreak, I should say, of the Zeka virus, and the governor has come on and said, there's no way that we can pay for eliminating these stagnant pools of water Uh, where the mosquitoes thrive. Yeah, I believe the first confirmed death from the ZEKEA virus was announced today
in Puerto Rico. So that's a real sad situation. Um. The tourism industry was doing well in Puerto Rico and there's a possibility that this outbreak might hurt the one area of the economy that was actually growing and sort of doing well. So, uh, it's a pretty unfortunate situation. Yeah.
I mean Governor Ali hud Garcia Perdia has said for a long time, we have to pay for essential services, and he's really you know, made this contrast between paying debt or making sure that the residents have a quality of life. And the residents of a commonwealth of Puerto Rico are leaving right. The actual population is shrinking that
I mean, that's the biggest problem. And the argument that the governor and his aids are making two bondholders is, look, the longer you drag this out, the less you know, share of a pie you're gonna have, because the pie is shrinking. There's fewer people on the island. Uh. The economy is continuing to contract. Um, So yeah, you have this economy that's stagnant and actually declining again. Uh. And the population uh out migration is is a huge part
of that. So they're saying, we need to get something done now so we can turn our economy around and you guys can get paid the most that we can afford at this time. So it's like three things. Right. You've got the government that has overspent or spent, according to some irresponsibly for a long time. Uh. If they failed to pass a balanced budget right, which is a constitutional requirement, and the g d P hasn't gone anywhere
since two thousand five. It's it's a real problem. And that's why Congress uh sort of has to get involved. The governor said today pretty much that the ball is in Congress is court now. We need them to do something. There is a Recovery Act in front of the U. S. Supreme Court which could get passed, but the idea right now is mostly eyes on Congress in Washington and see see what they can come up with a fistal control board that might be able to implement some more control
on government spending. You're gonna have a very busy weekend and a busy couple of months. Brian Schappetta, Thank you very much. Municipal bond reporter from Bloomberg can follow him on Twitter at b Chappetta. All about Puerto Rico and their debt problems. Our thanks to Reggie Basil, our engineer, producer Sam Lnga. I'm Pim Fox and this is Bloomberg Radio. Coming up on Bloomberg Law, discussion of the Trade Secrets Act.
We'll find out about this intellectual property law. It's been on the book since it's coming up next on Bloomberg Radio.