Reasonable people disagree on exactly how much debt Puerto Rico's government is responsible for, though they all agree that it's a pretty large number for the financially stressed commonwealth of 3.6 million residents.
The number often bandied about for Puerto Rico's debt is $70 billion; that's the amount of total public sector debt the commonwealth itself reports.
The smaller category of tax-supported debt for the commonwealth, however, is a number on which the three ratings agencies differ.
The commonwealth government is said to have $54.6 billion in net tax supported debt by Moody's Investors Service, $47 billion by Fitch Ratings, and $38.4 billion by Standard & Poor's.
The question of how much debt Puerto Rico has - and more importantly, whether the commonwealth can afford it - will take center stage soon, with a large bond deal expected in coming weeks.
The deal's reception with investors is critical after both Fitch and Moody's placed Puerto Rico on review for downgrade, specifically citing concerns about its ability to access the market.
Any downgrade would put Puerto Rico at speculative grade.
The ratings agencies agree that the Puerto Rico Electric Power Authority, with about $9.3 billion in debt, should not be considered commonwealth tax supported. PREPA receives most of its revenues from the rates it charges its customers.
The agencies differ in how they analyze debt obligations such as those of the Puerto Rico Aqueduct and Sewer Authority and the Highway and Transportation Authority.
Tax supported debt per capita is $15,099, $12,997, or $10,619, depending on whether one uses Moody's, Fitch or S&P figures. In any case, it's much higher than the U.S. median -- for example the Moody's median for the U.S. states is $1,074.
Whatever the total dollar value for Puerto Rico's commonwealth debt, analysts also look at other relative measures, such as debt per capita, and debt in relation to gross national product and personal income. They say these give a much better sense of the debt burden on Puerto Rico than do simple debt totals.
On these measures the commonwealth appears to be in bleak shape. Fitch Ratings believes debt as a percent of personal income is one of the best measures of debt load. The median for the 42 states that Fitch rates is 2.7%. Puerto Rico's commonwealth's debt is around 75%, said Laura Porter, managing director of Fitch's state ratings group.
Median state debt as a percent of gross product is 2% for the 50 states Moody's rates. For Baa rated sovereign governments the median percent of gross product is 30%. For Puerto Rico it is 79%.
Moody's also provides figures for government debt as a percent of government revenue. The median for U.S. states is 42% and for Baa rated sovereigns it is 148%. Puerto Rico is 260%.
However, analysts note that not all analyses and comparisons are unfavorable to the Puerto Rico credit.
"While debt and debt service requirements for the commonwealth are high, we note that the majority of the commonwealth's debt is long-term, fixed rate, and amortizing," Moody's vice president Emily Raimes said.
That's important when viewing what is on the surface an unfavorable comparison to the New York City debt crisis of 1975. At the time the city had $14 billion in debt. This compares to the $47 billion in tax-backed debt that Fitch says Puerto Rico has. Debt per capita was $1,772 versus $12,997 per capita for Puerto Rico today, using Fitch's figures.
However, if one adjusts the New York City debt per capita figure to 2014 dollars, one gets $7,673, not as far away from Puerto Rico's total.
Further, $6 billion of New York City's debt in 1975 was short term.
"A lot of New York City's problem was the amount of short term debt which could not be rolled at end, driving the crisis," said Janney Capital Markets managing director Alan Schankel. "Although Puerto Rico has short term debt, proportionally they have much less than New York City had at the time."
It's also important to consider that a great deal of Puerto Rico's economic activity isn't included in formal measures, experts say.
Puerto Rico's debt per gross national product and personal income is quite high partly because much of Puerto Rico's economy is hidden from formal measures.
"I place the underground sector in Puerto Rico between 40% and 45% of all consumption, and even that may be conservative," Parimal Choudhury, president of market-research firm Custom Research Center, said to the Caribbean Business web site. While the official economy has been shrinking since 2006, consumer spending has risen by 6% a year since that date, according to consulting firm Estudios Téchnicos.
The failure to capture taxes from the underground economy also increases the ratio of Puerto Rico's debt to government revenue.
The Puerto Rico Treasury recently began taking major steps to crack down on tax evasion. In the last few months it has hired 195 professionals and taken several other significant steps to crack down on the practice.
Puerto Rico government officials also argue that peculiarities of Puerto Rico's tax and government structure make normal debt ratio comparisons highly misleading.
In an October webcast Puerto Rico officials indicated debt burden should be measured by how it affects individuals. They noted that Puerto Rican residents overwhelmingly are not required to pay federal income taxes. Because of this, they are not required to finance the federal government's debt.
The federal debt now amounts to $55,541 per U.S. citizen who lives outside of the country's territories, a figure that dwarfs Puerto Rico's debt per capita. If federal and local debt burdens are added in, Puerto Ricans have a much lower government debt burden than anyone who lives in the 50 states, Puerto Rico officials said in October.
Moody's Lisa Heller cautions not to get carried away by that analysis.
"While Puerto Rico residents do not pay most federal taxes and therefore do not carry the burden of US federal debt, debt measures are also relatively high when comparing the general government debt loads of similarly rated sovereigns, though wealth levels are also relatively high compared to sovereigns," said Heller, a Moody's vice president.
Puerto Rico's government is responsible for a range of services that are generally handled by local governments in the 50 states, which means the commonwealth's government issues debt for projects that most state governments don't.
The Puerto Rico government runs and finances the island's public school system. The Puerto Rico police force is much larger and more powerful compared to the island's city police forces. When debt is used to build police headquarters or high schools in Puerto Rico, it is generally the commonwealth government and not local governments that issues the debt.
Fitch managing director Porter said that in understanding Puerto Rico's debt situation one should recognize that the residents do not pay for the federal debt and that many of traditionally local government responsibilities have been transferred to the commonwealth. But the commonwealth still has a lot of debt, she said.
Beyond the commonwealth's bond and note debt, there is also Puerto Rico's unfunded pension liability. This is still enormous on an actuarial basis. However, in the last 12 months the Puerto Rico government has passed major reforms of the government's employee, teachers, and judicial pension systems. These appear to provide cash stability to these systems.
However, a court has put a stay on the reform of the latter two systems while it considers appeals. Also, the reform of the employee pension system will require $200 million in annual contributions from the General Fund for the foreseeable future.
