June 24, 2014 / 6:01 PM / in 3 years

Fed's Dudley sounds alarm over Puerto Rico's high debt load

SAN JUAN, June 24 (Reuters) - New York Federal Reserve Bank President William Dudley warned Puerto Rico about its growing debt load and questioned if the island can sustain its high level of borrowing in the future in remarks prepared for delivery on Tuesday.

“Persistent deficits in the Commonwealth’s fiscal accounts as well as mounting deficits in the operation of the several major public corporations have substantially raised the Island’s overall level of public debt and led to serious concerns about whether the Island’s fiscal position is sustainable,” he said, according to a copy of the remarks.

He added that the bank is working on a report that will “examine the factors leading to the sizeable buildup of public debt on the Island and the key variables that will determine its future trend.”

Earlier this year, Puerto Rico sold $3.5 billion bonds in the largest junk deal ever in the U.S. municipal bond market.

Reporting By Reuters in San Juan, Writing by Lisa Lambert in Washington; Editing by Meredith Mazzilli

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