The GDB and some of its major creditors, who call themselves the Ad Hoc Group and hold roughly $935 million of GDB debt, will continue talking for the next 30 days. The creditors in a statement on Monday said they would not pursue legal action during that time.
In a statement late Sunday night, GDB said it reached "indicative terms" of a deal with the creditor group holding about a quarter of the nearly $4 billion in bonds, under which the group would agree to a two-step debt exchange, ultimately recouping about 47 percent of what they are owed.
The deal is a long way from done, and would need participation from all of GDB’s creditors in order to work, the bank said in the statement.
In a televised speech on Sunday evening, Puerto Rico Governor Alejandro Garcia Padilla imposed a moratorium on the debt payment, a "painful" decision he blamed on the absence of U.S. Congressional action to solve Puerto Rico's debt crisis.
The GDB is paying only the interest portion of its debt.
The GDB default is the most significant yet in Puerto Rico, because the bank acts as the main depositary and liquidity source for public agencies like the island’s highway and infrastructure authorities.
The U.S. territory faces $70 billion in debt, a staggering 45-percent poverty rate and a shrinking population as it enters the most dire stretch of its fiscal crisis. It owes another $1.9 billion on July 1 that Garcia Padilla has said it cannot pay.
Congress is debating a bill that would put the island’s finances under federal oversight and allow it to restructure debt in a bankruptcy-like process, but the bill has faced criticism from conservative and liberal wings of both parties.
As a U.S. territory, Puerto Rico does not have access to municipal bankruptcy protection.
In Sunday's statement, GDB President Melba Acosta stressed the importance of a bankruptcy process for Puerto Rico, saying the GDB deal "would be highly unlikely" to work without one.
The Ad Hoc Group includes hedge funds Avenue Capital Management, Brigade Capital Management, Claren Road Asset Management, Fir Tree Partners, Fore Research & Management and Solus Alternative Asset Management.
Other top investors are Thompson Investment Management and Frost Investment Advisors.