Hedge funds first starting buying Puerto Rico debt in the summer of 2013 because they liked what they saw: A government that was paying high, tax-free yields that couldn’t go bankrupt.
Puerto Rico in Distress
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Lawyers for Puerto Rico's government are drafting a forbearance agreement that could allow the U.S. territory to avoid invoking bankruptcy protections in the short-term, Reuters reported on Friday. Puerto Rico and its creditors wrapped up roughly a week's worth of mediated talks in New York, aimed at striking a deal to restructure much of the $70 billion in debt the island cannot pay.
The trading prices of Puerto Rico bonds largely account for the losses investors will take when the island restructures its $70 billion debt, said Art Steinmetz, the chairman and chief executive officer of OppenheimerFunds Inc., a major holder of the island’s securities, Bloomberg News reported yesterday.
A Puerto Rico labor union yesterday sued Governor Ricardo Rossello and the U.S. territory's financial oversight board, saying that pension cuts being proposed as part of the island's fiscal turnaround were unconstitutional, Reuters reported.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.