Puerto Rico's debt gets a big haircut

Activists march calling for support of Puerto Rico one year after Hurricane Maria devastated the island on September 23, 2018 in Los Angeles California.
Activists in Los Angeles call for support of Puerto Rico one year after Hurricane Maria. Photo: Mario Tama/Getty Images

Puerto Rico reached an agreement with bondholders on restructuring around $35 billion of its debt, which accounts for close to 50% of the bankrupt island’s total.

Details: The agreement calls for forgiveness of more than 60% for all $35 billion, a 36% haircut on pre-2012 general obligation or "GO" bonds and a 27% haircut on public authority bonds that carry a constitutional payment guarantee.

U.S. budget deficit up nearly 40% from last year

Photo: Mark Wilson/Getty Images

The Treasury Department says the U.S. budget deficit has increased to $738.6 billion in the first 8 months of the fiscal year — up $206 billion from the same time last year, according to a report from the Congressional Budget Office.

Why it matters: The deficit has continued to grow under President Trump as a result of Republican tax cuts and increased government spending, reports Bloomberg. Even increased customs revenue stemming from tariffs — which Trump falsely insists is being paid for by China — has failed to bridge the widening gap. The deficit is expected to reach $897 billion by the end of the year.

Go deeper... Chart: How the U.S. budget deficit has fluctuated since the 1980s