Mutual Finds Not Waiting To See How Puerto Rico’s Story Ends

It’s one thing for the island’s governor to say it won’t pay its bills, but another entirely when the president does. Even if he doesn’t mean it.
Author:
Publish date:
Updated on
By U.S. Department of Defense Current Photos Kris Grogan/U.S. Customs and Border Protection Office of Public Affairs - Visual Communications Division (170923-H-NI589-0009) [Public domain], via Wikimedia Commons

By U.S. Department of Defense Current Photos Kris Grogan/U.S. Customs and Border Protection Office of Public Affairs via Wikimedia Commons

OppenheimerFunds and Franklin Templeton have been through a lot in Puerto Rico. When the island’s governor said it would default, they stuck around. When it actually did default, they stuck around, all the while losing the kind of money one loses when one owns debt whose debtor says it won’t pay.

But Oppenheimer and Franklin, they didn’t give up. Not even when Puerto Rico went bankrupt and starting playing hardball. But then it started to rain, and the president started to talk, and even though they can’t get much more than a quarter for the bonds now, they’re getting the hell out.

The storm, and comments by President Donald Trump hinting at debt forgiveness, upended bondholders’ calculus. Prices of general obligation bonds sold by the Franklin Mutual Series have been cut in half since May and now trade around 30 cents on the dollar, according to data from the Municipal Securities Rulemaking Board….

“You can run as many spreadsheets as you want but how do you interpret the politics around it,” Mr. Rosenblum says.

Bond Funds Dump Puerto Rico [WSJ]

Related

News

Puerto Rico Not Picky, Will Take Felipe, Esteban, Carlos, Or Guillermo If Juan Paulson Won't Make The Move

Earlier this month, Bloomberg reported that John Paulson was considering making Puerto Rico his home for a little more than half the year, having been intrigued by the idea of working from the beach and not having to pay capital gains taxes. For its part, PR was pretty excited about the prospect of the hedge fund manager calling the island home on tax forms, as his presence would create a much needed you scratch our back we'll scratch yours situation for the local economy. And while a spokesperson for Paulson has categorically crushed the dreams of the Commonwealth, apparently everyone has gotten over it pretty quickly and would like to make it clear that anyone with money to spend is welcome, nay, encouraged to come on down. Millionaires would be good, billionaires are better but beggars/choosers/etc.