The Street is abuzz with Greece’s crisis now. However, a similar crisis in Puerto Rico may also keep investors worried. A crumbling economy, massive public debt and an increasing government deficit have pushed Puerto Rico to the brink of default, and it wants the right to declare bankruptcy. Puerto Rico owes $73 billion it is unable to repay.

Governor Alejandro Padilla has stated that Puerto Rico is bankrupt and it is mathematically impossible for it to repay its creditors. Imposing sales taxes in 2006, retrenchment of public employees in 2009, pension reform in 2013, and the latest gas tax and the Sales and Use Tax (IVU) were some of the measures Puerto Rico had been trying to effectively use.

Unfortunately, it failed to restrict the country from amassing about $73 billion of debt, which translates into over $20,000 per person in Puerto Rico. This ironically is more than the median income of $19,520 per year.

What This Means to the US

Though located a thousand miles away from the continental US, Puerto Rico's debt concern is now becoming a 2016 campaign issue. The larger concern for investors is the exposure to this island. More than 20% of bond mutual funds hold Puerto Rican bonds. Moody’s Investors Service has cut about $56 billion of Puerto Rico’s other bonds into the "junk" category. Also, escalating tensions should be indicative to let go of certain Puerto Rican stocks that investors might have in their portfolios.

In addition to the exposure, the Puerto Rico crisis may have a domino effect. It will most likely affect the benchmarks going forward more prominently than it has in recent days when everyone was busy reading about the Greek drama. According to Reuters, the White House “is not contemplating a federal bailout of Puerto Rico to help the island deal with its debt crisis.” Meanwhile, there is no economic growth in the island.

Puerto Rico is a US territory and is overseen by the US federal government. However, the island is not part of US economic statistics and GDP or employment data. It also does not share sovereignty. Nonetheless, the US has some cost burden in the form of aid and entitlement plans.

Greece, Puerto Rico Suffer Same Issues

There are some common problems that Greece and Puerto Rico suffer now. Both use a common currency over which they have no control. Honestly, the currencies are more suited for stronger economies. Citizens and potential businesses are also leaving for better avenues in the mainland US. This further curtails the tax base. Puerto Rico also has the additional burden of having to do with the same minimum wage set nationally.

Hillary Clinton addressed these issues and said that Puerto Rico needs “a longer term plan to address a declining population, eroding employment base, high utility rates and the impact of unequal federal investments."

The island has larger issues to worry about, as well. The Bureau of Labor Statistics (BLS) states that with 12.4% unemployment rate in May, the island has the highest unemployment rate among other US states. Also, income per capita for Puerto Rico is the lowest of all states, even lower than Mississippi. Poverty rate is at a significant 45%.

Bigger Concerns for US States?

The Puerto Rico crisis also reflects on similar problems the US has in hand. Puerto Rico is one territory of the US drowning in debt now. However, there are states that offer a grim picture of the future. Puerto Rico’s debt as percentage of GDP stands below 70%. But according to a report by the nonpartisan States Project, the percentages for Hawaii, New Jersey and Ohio are 61%, 54% and 51%, respectively.

The States Report data also reveal that some states have far larger debt per capita than Puerto Rico’s $20,300. The same for Alaska, New Jersey, Hawaii, Connecticut, Ohio and Illinois are $39,600, $33,800, $33,500, $32,300, $25,900 and $25,200, respectively. States are projected to owe $4.5 trillion. Moreover, there is $2.8 trillion in debt for local governments.

Nonetheless, local governments have the right to declare bankruptcy. Thus, Congress’ treatment of Puerto Rico’s crisis will indicate the future of these states. The financial world’s reaction will also help decide if the solution, whatever it is, is sustainable for other debtor states.

Better to Be Safe Now

Puerto Rico is in dire need to restructure its debt. Its previous measures have failed but the island must strive and may raise property taxes as well as stop minimum wage laws. According to a report by former International Monetary Fund economists and as reported by Reuters, “Puerto Rico faces hard times. Structural problems, economic shocks and weak public finances have yielded a decade of stagnation, outmigration and debt… A crisis looms.”

The exposure to Puerto Rico and the significant investments in bonds have already affected bond insurers. On this note, it would be prudent to avoid certain Puerto Rico stocks:

EVERTEC, Inc. EVTC is engaged in transaction processing business primarily in Latin America and the Caribbean. It offers payment processing, card products processing, electronic benefit transfer services, cash processing and payment solutions, among others.

EVERTEC currently carries a Zacks Rank #4 (Sell). It has lost 8% and 7.5% over the last 5 days and one month. The yearly growth estimate of 6.1% is well behind industry growth estimate of 16.1%.

OFG Bancorp OFG is a financial holding company that conducts its business activities through its subsidiaries, primarily in Puerto Rico. Its product and services consist of consumer banking and lending, commercial banking and wealth management.

OFG Bancorp carries a Zacks Rank #4. Its 5-day loss stand at 34.5% and has slumped 31.9% over the last one month. The current quarter growth estimate is negative 27.6%.

Popular, Inc.’s BPOP principal subsidiary, Banco Popular de Puerto Rico, has one of the largest retail franchises in Puerto Rico, operating numerous branches and automated teller machines.

Popular, Inc also carries a Zacks Rank #4. Its 5-day and one-month loss are 3.7% and 13.5%, respectively. The current quarter growth estimate is a negative 7.1% and 2015 growth projection is also a negative 5.1%.

It is not certain if White House will let Puerto Rico fail or if the IMF will offer a bailout plan. But certainly the effect of financial concerns will travel to the mainland US.