Muni Massacre – Puerto Rico Bonds Plunge Near Record Lows
The last 5 days have seen the biggest crash in Puerto Rico muni bonds since June 2015 when the Governor declared debts “unpayable.” As Bloomberg notes, investor speculation about the scale of the losses Puerto Rico will foist on bondholders caused the price of the island’s most active bond to continue to slide in the heaviest trading in nearly four months.
As Bloomberg detailed previously, the Puerto Rico fiscal recovery plan that was approved by the island’s federal overseers isn’t good news for investors holding its $70 billion of debt. The proposal, which was redrawn by Governor Ricardo Rossello to address concern that he was relying on overly optimistic forecasts, would leave less than $7 billion for debt-service costs from 2018 through 2026, according to figures included in the most recently released proposal.
That’s less than a quarter of what’s coming due and nearly $4 billion less than in Rossello’s initial proposal last month, which the board said didn’t do enough to steady the territory’s finances.
John Oliver explained the PR disaster a year ago…it’s only got worse.