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How Wall Street Fed Puerto Rico’s $70 Billion Borrowing Binge

October 22, 2013 In The News

Seven years ago, in the wake of a government shutdown caused by a $740 million budget deficit, Puerto Rican officials vowed to fix the island’s finances by 2010. Now investors are calling their bluff.

In the $3.7 trillion municipal-bond market, Puerto Rico and its agencies more than doubled their borrowing since 2004 to $70 billion this year. Even as the island’s population shrank and the economy contracted 16 percent since 2004, the government kept selling enough bonds to saddle each man, woman and child with $19,000 in debt.

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