SAN JUAN, Puerto Rico–NCUA is downplaying potential risk to federally chartered credit unions here after Puerto Rico defaulted on a $58-million payment on bonds that are largely held by credit union members.
The agency said it’s important to distinguish between the 12 federal credit unions in Puerto Rico that are regulated and insured by NCUA, and the 115 cooperativas that are chartered by Puerto Rico and insured by a separate entity, COSSEC.
“Any exposure on the part of the federal credit unions to the bonds in question issued by Puerto Rico is minimal,” the agency said in a statement. “This minimal exposure does not represent a material risk to the Share Insurance Fund.
According to NCUA, as of Q1 2015, the 12 federal credit unions, collectively have about 80,000 members and assets of about $700 million.
NCUA issued an unofficial estimate that the cooperativas hold $1.3 billion in Puerto Rican government and government-related bonds.
The missed bond payment is part of the larger threat of default by Puerto Rico, which is $72 billion in debt. The $58-million payment was due on a set of bonds known as “moral obligation” bonds, which are so-named because there is only a moral but not legal obligation to pay them back, according to Reuters.