According to this article, Puerco Grande (I mean Puerto Rico) is obviously defaulting on some of its debt but when the article goes down the list it keeps indicating that principal recovery will be 35-65%. I don't think so. The credit crunch hasn't even really gotten started yet and El Puerco Socialista is defaulting. In other words, money is still relatively easy to come by. Wait until money becomes scarce. I'm predicting an overall recovery of 5-10% and that is being generous.
Folks, if you are going to default, go big. Why? Because a small one looks just as bad on your credit as a big one. Default is default. They don't have ratings for "big default" and "small, harmless default". So when the citizen of PR are rioting in the streets and a bond payment comes due, the PR gov is just going to say "we have other things to worry about" and that will be that. There is nothing anyone can do about it but cry and in fact it is really as much the fault of the lender as of anyone else.
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