Puerto Rico Bonds Part II: Understanding the Volatility

Follow-up to February’s article Puerto Rico: A Delicate Balancing Act. 

In June of 2014 the Commonwealth of Puerto Rico’s legislature passed the Puerto Public Corporations Debt Enforcement and Recovery Act (the Act) for restructuring the outstanding debt of public corporations. Its passage got a cold reception from the municipal bond market. Continue reading

Puerto Rico: A Delicate Balancing Act

Recently, the commonwealth of Puerto Rico’s credit ratings were downgraded by each of the three rating agencies to “below investment grade” status. This is significant, since no other state or state-equivalent territory of the U.S, carries a below investment grade credit rating.

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Municipal Bond Market: Tune out the Noise

Since Ben Bernanke’s misinterpreted comments on tapering, Detroit’s bankruptcy filing and the even more recent, well-publicized concerns regarding Puerto Rico, the municipal bond market has struggled mightily. Year-to-date as of September 5, the Barclay’s Municipal Investment-Grade Index is down 5.3%, and the Barclay’s Municipal High Yield Index is down 8.3%.

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