--- title: Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds | TIME description: Puerto Rico's debt crisis might miss Wall Street but mutual funds could take a hit. canonical: https://time.com/video/vVmWgZu1/ og:title: Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds og:description: Puerto Rico's debt crisis might miss Wall Street but mutual funds could take a hit. og:url: https://time.com/video/vVmWgZu1/ og:image: https://cdn.jwplayer.com/v2/media/vVmWgZu1/poster.jpg?width=720 og:type: video.other twitter:card: summary_large_image twitter:title: Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds twitter:description: Puerto Rico's debt crisis might miss Wall Street but mutual funds could take a hit. twitter:image: https://cdn.jwplayer.com/v2/media/vVmWgZu1/poster.jpg?width=720 --- # Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds > Sponsored content. Supplied in partnership with TIME. 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They are at time.com/newsletters and are separate from a paid subscription. ## Video: Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds [Watch (HLS stream): Puerto Rico Debt Crisis Could Hit U.S. Mutual Funds](https://cdn.jwplayer.com/manifests/vVmWgZu1.m3u8) (1:23)  _Published 2015-08-04. Puerto Rico's debt crisis might miss Wall Street but mutual funds could take a hit._ --- Jul 27, 2023 6:37 PM UTC --- ## More From This Series [All Videos](https://time.com/video/) [Is Puerto Rico Part of the U.S? Here's What to Know](/video/aOUzqQ0z/) ### Is Puerto Rico Part of the U.S? Here's What to Know [How Puerto Rico's Record Debt Is Worse Than Detroit's](/video/6LVpckuh/) ### How Puerto Rico's Record Debt Is Worse Than Detroit's [Puerto Rico's Financial Crisis: Is The Island The New Greece?](/video/4J1YQOCG/) ### Puerto Rico's Financial Crisis: Is The Island The New Greece? --- ## Transcript For the first time since becoming a US territory, Puerto Rico has officially defaulted. On monday, Puerto Rico's government development bank paid about $ 630, 000 of the $ 58 Million due to creditors. All and all Puerto Rico is currently looking at an outstanding debt of $ 73 billion dollars. If the economic meltdown has any fall out in the US, the worst of it isn't expected to be felt on Wall street. Many americans actually hold Puerto Rico's debt through mutual funds. According to Morning Star more than 20 % of bond mutual funds own Puerto Rican bonds. The bonds are rated as junk now but a few years ago they looked pretty good. They offered a high yield and are tax exempt at the state, local, and federal levels. Since Puerto Rico is a U. S. territory not a state, it can't file for the same bankruptcy protections Detroit did during its debt crisis. But there's a bill going through the U. S. Senate that would let all of Puerto Rico's public corporations and municipalities to seek chapter nine bankruptcy protection. But there hasn't been much support for it. There is some speculation the bill is driving Puerto Rico's financial strategy. Some analysts have called the default financial suicide. So it's possible the move is meant to turn heads in Congress and get the bill moving. The country is scheduled to purpose a plan September 1st for putting off debt payments. 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