Puerto Rico Bonds After Maria

Excerpt of article below:

Most Puerto Rican munis are down by two to three cents on the dollar, estimates Kevin Woods, chief investment officer at Asset Preservation Advisors. The benchmark 8% coupon government obligation bonds traded down to 56. Prepa bonds, backed by the island’s electric authority, traded down to 52, and the senior sales-tax revenue bonds, known as Cofinas, are down to 60. “There isn’t a lot of value here,” says Woods.

There is one bright spot—insured bonds have risen, notes John Mousseau, director of fixed income at Cumberland Advisors. Those mainly trade off the financial health of the insurers, and the injection of federal funds may mean those firms don’t have to keep covering interest payments for so many years. Also, Prepa bonds ultimately may have some upside. “This is an awful catastrophe,” Mousseau says. “But now there is a chance to get the infrastructure to a better level, faster with some federal help.”

Read full article at Barron’s (subscription required): http://www.barrons.com/articles/puerto-rico-bonds-after-maria-1506142967


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