September 4, 2015 / 9:48 PM / 2 years ago

Puerto Rico skips $1.4 mln Sept. 1 payment

NEW YORK, Sept 4 (Reuters) - Puerto Rico's Public Finance Corp, the government agency that defaulted on its bonds in August by paying a fraction of what was owed, did not make a $1.4 million interest payment due Sept. 1, according to a filing and a spokesman for the island's Government Development Bank.

U.S. Bank, the trustee for the PFC bonds, filed a public notice stating it had not received the payment of debt service due Sept. 1. A spokesman for the GDB confirmed that the payment amount was to be $1.4 million.

It was the second full payment in just over a month that the PFC has failed to make. It paid $628,000 of a $58 million payment due Aug. 1, a move considered a default by investors and creditors, the first by the U.S. commonwealth.

"We already know they're in default," said David Hitchcock, an analyst at Standard & Poor's. "We're not expecting interest to be paid."

Governor Alejandro Garcia Padilla has said that the Aug. 1 partial payment was not a default, because of the model of the PFC, which is appropriation-backed debt.

Garcia Padilla shocked investors in June when he said that the island's $72 billion in debt was not payable. The commonwealth is due to complete a fiscal reform plan by Sept. 8.

The Puerto Rico Electric Power Authority (PREPA), the island's electricity utility, reached a restructuring agreement with some bondholders earlier this week in what has been seen as a critical test for the commonwealth to overcome challenges in fixing other indebted entities. (Reporting by Jessica DiNapoli; Editing by Dan Grebler)

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