Governor Says Puerto Rico's Debts 'Not Payable': NYT

June 28 (Reuters) - Puerto Rico is set to release a key financial stability report by former IMF economists on Monday, officials said on Sunday, in a crucial week for the island as bond deadlines come due and investor concerns increase about the possibility for debt restructurings and a limitation on government services.

The New York Times on Sunday said the report would propose a bond exchange with new bonds offered with a longer or lower debt service. The newspaper cited Governor Alejandro Garcia Padilla saying in an interview that the island's debts were not payable and that creditors would probably have to take significant concessions such as five year payment deferrals.

Puerto Rico is struggling with a $73 billion debt load and faltering economy while its Government Development Bank is running low on cash. The island is facing crunch time this week with several bond payments such as a July 1 deadline to make a $655 million payment on its general obligation debt while its struggling utility PREPA is in talks to avoid a possible default.

"We have to recognize we have a very serious problem with the fiscal situation of the island," House speaker Jaime Perello told press on Sunday.

Puerto Rico in February engaged a group of former International Monetary Fund economists to analyze its economic and financial stability and growth prospects. A separate report was also commissioned by consulting firm Conway MacKenzie.

Perello said that after the report is presented on Monday, work groups should be established. House minority leader Jenniffer Gonzalez said the governor would meet with mayors and lawmakers to discuss the report.

"(Next week is) the tipping point," said Adam Weigold, senior portfolio manager at Eaton Vance, on Friday.

Puerto Rico's debt problems could lead to a reduction in government services, investors said. However, a source familiar with the situation said on Friday the island is not contemplating a partial or full shutdown of government services.

Daniel Hanson, analyst at Height Securities, said the reports would allow the island to give an "opening bid" to creditors regarding a possible restructuring of the debt.

"Next week is probably a good buying opportunity," Hanson said. "We expect a lot of downside in all the bonds."

Puerto Rico's benchmark general obligation bonds issued in March 2014 slid on Friday to close at a record low of 77 cents on the dollar to yield 10.84 percent. (Reporting by a contributor in San Juan and Megan Davies in New York; Editing by Matthew Lewis, Toni Reinhold)

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