The Government Development Bank (GDB) is seen in San Juan, November 30, 2015. Reuters/Alvin Baez/File Photo

SAN JUAN (Reuters) - Puerto Rico’s Government Development Bank said it has reached a deal with credit unions to avoid defaulting on about $33 million of debt due on Monday.

The GDB, Puerto Rico’s primary fiscal agent, said in a statement on Friday that it was still negotiating with other creditors in hopes of avoiding default on another $422 million due on Monday. The terms of the deal struck with the credit unions, according to the statement in Spanish, are also “available to other ... creditors of the GDB, including other institutional bondholders.”

The credit unions will exchange their debt for new notes due on May 1, 2017.

GDB’s indebtedness, about $4 billion in total, is part of a $70 billion debt load in Puerto Rico, the U.S. territory facing a decade-long recession, 45 percent poverty rate and shrinking population. GDB, which acts as a liquidity source for the island’s public entities, is negotiating with hedge funds including Fir Tree, Solus and Claren Road in hopes of staving off a default that could threaten services and operations on the island.

Optimism for a deal has been low, with Governor Alejandro Garcia Padilla saying this week that “there will be a default on Monday,” and a source close to talks telling Reuters there is “no indication” of progress on a deal.

But the accord with credit unions is a sign that talks are still alive. Height Securities analyst Daniel Hanson, who follows Puerto Rico closely, said on Friday he remains bullish for a deal with other creditors by Monday. “The idea that GDB has $4 billion of debt due in the next five or six years is problematic, but there’s a really strong inventive to find way to stretch that debt out,” he said.

A default at GDB would likely mean turning its operations over to a receiver who, under Puerto Rico’s fiscal emergency law passed this month, would have authority to shift the bank’s deposit accounts to a new, bridge entity, while leaving the burdensome debt liabilities at a GDB shell.

The legality of those measures would likely be challenged by creditors in costly lawsuits that could perpetuate economic uncertainty on the island of 3.5 million.

A default would also ratchet up pressure on U.S. Congress to legislate a fix for Puerto Rico. Lawmakers remain locked in dispute over a draft bill that would put Puerto Rico’s finances under federal oversight and allow it to restructure debt.