Sovereign Default: It’s Not Personal, Just Business

Less than three years after the governor of Puerto Rico called repayment of its debt a “moral obligation,” the U.S. territory is headed for the fourth-largest government default on record.

Though markets have met the event with a shrug, that shouldn’t diminish the significance of the moment. It underlines how much the stigma about government default has faded. Investors would be wise to build this risk into their calculations when lending to governments from now on, especially since arithmetic suggests more defaults are...