Puerto Rico has been mired in an eight-year long recession and a brutal drought that makes California's drought look mild.
On July1st, things could get a whole lot worse.

As legislators struggle to pass a budget in San Juan, the power utility is set to talk with creditors in New York Thursday about restructuring $9 billion of debt. It faces a July 1 bond payment and has insufficient reserves. Meanwhile, lawmakers are considering a bill that would allow the government to suspend monthly cash deposits for repayment of general-obligation debt.
“The fiscal and economic situation in Puerto Rico has reached a tipping point,” Cesar R. Miranda Rodriguez, the commonwealth’s attorney general, said in prepared testimony to a U.S. House committee Wednesday in Washington. “The situation is truly dire.”

Gov. Alejandro Padilla has appealed to Congress for the ability to declare bankruptcy, but he is unlikely to get his wish.
Meanwhile, the rats are abandoning the ship. David Chafey, the Chairman of the Government Development Bank (GDB), is stepping down under pressure.

Puerto Rico's GDB has seen its liquidity fall sharply, to $778 million as of May 31 from $1 billion at the end of the previous month.
Puerto Rico, struggling with $72 billion in debt, must make a bond payment of $655 million on its GO bonds on July 1 and needs to put a budget in place so it can raise financing at the start of the new fiscal year.

Puerto Rico's House passed a law on Tuesday to suspend monthly payments that it makes into a reserve account for its general obligation (GO) debt, but this amounts to robbing Peter to pay Paul.
20-year Muni bonds that were sold for 93 cents on the dollar in March are selling for 78 cents today.
Around 60% of Puerto Rico's debt is held by American citizens, much of it in retirement accounts. Although hedge funds are major players as well.
Puerto Rico's long economic slump has caused a huge migration of their educated class to the mainland.