New York (HedgeCo.Net) – There are a number of hedge funds that have purchased sovereign debt from Puerto Rico and now the hedge funds and the island nation are scrambling to put together a solution for funding the government as a default seems like a possibility. Just last week a bill that would have paved the way for a new bond sale was defeated in the Puerto Rico’s House of Representatives. According to a report from the Financial Times, hedge funds hold about $4.5 billion in government debt from Puerto Rico.

The debt of the U.S. territory is now yielding 10.5% and that is higher than the sovereign debt of Greece. As the possibility of default has become more realistic, the yields have risen considerably. The hedge funds have a hired a legal firm to explore the possibilities should the government decide to default on the debt. According to a report from Reuters, the hedge funds are planning to hire Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP, a Washington D.C.-based firm that describes itself as a high stakes litigation boutique.

Puerto Rican officials have stated that unless a funding deal can be reached in the coming weeks, the government will have to shut down as of June 30.

Earlier this week, Jeff Gundlach of DoubleLine gave Puerto Rico bonds as his top investment idea at the Sohn Investment Conference in New York.