Puerto rico faces historic $72b default

Pedestrians walk past a shuttered business in San Juan, Puerto Rico. Getty Images Puerto Rico appears lunging even closer to default, after one of the commonwealth's financing agencies

failed to make a $93 million cash transfer to cover an August 1st debt payment. Public Finance Corp, which provides financing to the island's agencies and is a subsidiary of Puerto

Rico's Government Development Bank, did not transfer funds to pay the principal and interest on its bonds. A U.S. territory, Puerto Rico currently has about $72 billion in debt

outstanding Last month, Governor Alejandro García Padilla called for negotiations with bondholders because the commonwealth is not able to pay its debts. Read MorePuerto Rico's

'death spiral' gets a reprieve Over the past few years some of the top-performing municipal bond funds have taken massive huge stakes in Puerto Rico's debt. According to

mutual fund research firm, Morningstar, U.S. bond funds hold an estimated $11.3 billion total exposure. Read MoreIs your bond fund invested in Puerto Rico? Sixteen of the 20 funds are

members of the OppenheimerFunds' Rochester Group,. Last month Rochester Funds Municipals, the largest fund in the Rochester group $1.3 billion in assets, had more than a quarter of its

portfolio invested in Puerto Rican debt. The fund experienced a 1.8 percent drop in net asset value in June. Hedge funds are also active investors in Puerto Rico's debt, and a group

holds an estimated 40 percent or about $3 billion of Prepa bonds. Read MoreInvestors scramble to avoid Puerto Rico losses On Wednesday,Federal Reserve Chairwoman Janet Yellen said the

central bank would steer clear Puerto Rico's municipal debt crisis, leaving any potential government intervention to Congress. "What we have been doing is monitoring developments

in Puerto Rico," Yellen said. "We are looking to see are there risks that are being transmitted to the broader municipal debt market and we're not seeing signs of

contagion." Read MoreFed leaving bull market room to run U.S. lawmakers continue to weigh possible legislation to grant Puerto Rico rights to file Chapter 9 bankruptcy. It is now

allowed for U.S. governments, but not in the commonwealth. So is there a road out to the debt crisis? Luis Fortuño served as Puerto Rico's governor from 2009 throuigh 2013.and he told

CNBC's "Power Lunch Thursday "The markets and a lot of people in Washington believe that Puerto Rico's system risk is just not there."