No way out

Investors in Puerto Rican bonds have been waiting nervously ever since Alejandro García Padilla, the American territory’s governor, announced in late June that its debts were unpayable. On September 9th he released a recovery plan that puts the island’s cash shortfall at $28 billion in 2016-20, or 40% of its current, shrinking annual output. The plan also proposes a series of budget cuts, tax increases and other reforms to cut the shortfall in half. As for the rest, it merely says the government is “working on a voluntary exchange offer”, without giving any details. But the island’s many creditors, who hold debt from 17 public entities, each offering varying degrees of protection, are about as likely to volunteer en masse for haircuts as the government is to pay them on time and in full.