Puerto Rico is in a 24-hour debt showdown again

Analysts at Moody's Investors Service had expected Puerto Rico to renege on its promise to pay another $80 million or so to holders of lower-priority bonds, following an earlier default in August.

"The imminence of a default when presented with the alternative between paying creditors and providing essential government services looms large", Garcia Padilla told the U.S. Senate Judiciary Committee.

"Puerto Rico's liberal-leaning politicians - who today are hosting Hillary Clinton in San Juan - have taxed and spent too much", wrote Rubio, "and lacked the political courage and competence to pull Puerto Rico out of economic despair".

The payment on bonds issued by the GDB was crucial as Puerto Rico tries to stretch its liquidity into 2016 to provide more time to restructure debt.

"People in Puerto Rico are nervous". "It is a rather complex banking issue and once the analysis are done, I must to decide what is best for Puerto Ricans".

There had been speculation that the US territory would default on all or part of $355 million in notes issued by its financing arm, the Government Development Bank, and due December 1.

Representatives from Puerto Rico - including the Governor - have been making the case that the island should be allowed to undertake the same process Detroit used when it faced bankruptcy.

Grassley questioned giving Puerto Rico access to the bankruptcy code in light of that, and instead has pushed for other steps to right the island's finances, including a federal board to step in and help steer the island back to a healthier budget.

If it comes to that, they say, the island's 3.5 million residents would come first and the island's debt would have to be settled in what promises to be a long, expensive and chaotic series of lawsuits that in the end would harm both creditors and the residents of Puerto Rico.

Stephen Spencer, managing director of Houlihan Lokey in Minneapolis, Minnesota, said the comparison to bankruptcies in other municipalities, notably Detroit, distressed him. Through its subsidiary National Public Finance Corp., MBIA insures the general obligation-guaranteed portion of the bank's debt payment.

"We are reduced to the role of supplicant, pleading for equal treatment, or at least more equitable treatment", Pierluisi said.