Puerto Rico to default on $779m debt
Puerto Rico announced on Friday that it would default on $779m (£588m) of debt.
Debt payments totalling just over $2bn were due on Friday.
Governor Alejandro Garcia Padilla said Puerto Rico did not have the money to pay. The island has just $200m in its operating accounts.
US President Barack Obama signed a bill into law on Thursday giving the island access to a debt restructuring process and halting any litigation arising from defaults.
As part of the US law, the island's finances will soon come under a US federal oversight board.
Puerto Rico has been struggling to make payments on its $70bn debt load.
Mr Padilla signed an executive order Thursday declaring a moratorium on a portion of that debt.
"Even if I had shut down the government, we wouldn't have had enough money to make the payment," Mr Padilla said.
"Puerto Rico will now govern itself like an adult country, responsibly, spending only what it can afford," the governor said.
"Today, the island starts belonging to us again, and not to Wall Street," he added.