Puerto Rico's Senate approved a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017 in the latest escalation of the Caribbean island's fiscal crisis.

The measure, passed around 2:30 a.m. local time, would allow Governor Alejandro Garcia Padilla to suspend payments on debt backed by the government, the island's Government Development Bank and other public agencies, according to a copy of the legislation obtained by Bloomberg. That includes the Sales Tax Financing Corp., known by its Spanish acronym Cofina. A default on those obligations would be a first for Puerto Rico, which so far has only failed to pay on bonds backed by legislative appropriation and rum taxes.


Non-constitutionally protected bond payments would be suspended immediately under the proposal, while those backed by the constitution would be halted starting July 1, when Puerto Rico owes $805 million on its general obligations. The bill would also prevent creditors from suing the commonwealth for defaulting through January 2017, the same as the moratorium period.

General obligations with an 8 percent coupon and maturing 2035 traded Tuesday at an average price of 66 cents on the dollar, the lowest since the bonds were first sold in 2014, data compiled by Bloomberg show. The average yield was 12.8 percent.

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