To Lev Steinberg, it seemed like a good place to park his nest egg.Puerto Rico bonds offered high returns and tax-free income. And there was little chance, his broker assured him, that the government would default on its debt.So Mr. Steinberg went all in, investing more than 85 percent of his retirement savings in funds with large concentrations of Puerto Rico bonds.“They told me this was safe,” said Mr. Steinberg, a 64-year-old mathematics professor at the University of Puerto Rico, “that the legal protections to repay the bonds were strong.”As it turns out, the bonds were far from safe.Puerto Rico officials now say the government cannot afford to pay its $72 billion in debt. And last week, the government defaulted on a bond payment for the first time since the island came under the jurisdiction of the United States nearly 117 years ago.More indebted than any American state by some measures, Puerto Rico sold its bonds far and wide, to everyone from wealthy Midwesterners to New York hedge funds. But more than 20 percent of the government debt is owned locally. And as values have plunged, some of the most intense pain is being felt by the tens of thousands of Puerto Ricans who bet much of their savings on the bonds.“These are doctors, stay-at-home moms, teachers, older people, young people,” said Jeffrey B. Kaplan, a Miami lawyer whose firm represents more than 150 Puerto Rico bond investors. “And now they have all their eggs in one basket.”How so many ordinary Puerto Ricans came to shoulder such a large share of the island’s debt can be explained by a confluence of factors: a local government desperate to borrow money, banks collecting fees for selling the bonds, and brokers encouraging residents to buy them.Even some of the riskier debt, which previous administrations had difficulty selling to investors in the rest of the United States, found a home in the investment accounts of ordinary Puerto Ricans, according to former finance officials.It was not just residents who were loading up on the bonds. The island’s 116 credit unions, which serve many poor and rural communities, also became big buyers after local regulators allowed these small lenders to take more risks with their investments.