4Q2019 Review: Puerto Rico

Author: Shaun Burgess, Post Date: January 3, 2020

As we reflect on a tumultuous fourth quarter for the Commonwealth of Puerto Rico, early progress in 2019 in the island’s bankruptcy brought optimism, however that optimism has since turned to frustration as headway has slowed, uncertainty has increased, and questions remain unanswered.

Market Commentary Puerto Rico

October saw the release of a plan of adjustment to restructure the island’s public debt and pension liabilities. Though opposed by many creditors, the plan did provide a basis and a structure for court-ordered negotiations. We did not expect negotiations to go anywhere, however, unless questions regarding the validity of certain debts were answered. Our expectations were confirmed as the negotiations have yielded little except a recommendation from mediators for litigation regarding debt validity to move forward.

One of the most pivotal questions to date will be answered sometime in 2020. Following oral arguments, the Supreme Court is expected to rule regarding whether Puerto Rico’s FOMB officials are territorial or federal representatives and therefore whether they were appointed appropriately. What the justices decide remains to be seen, but the ramifications of their decision could be enormous.

2020 is set to be a crucial year for the Commonwealth, as we may finally get much-needed answers. Although this year did bring us closer to a conclusion, an exit from bankruptcy remains a long way off.

Our Puerto Rico Insured Bond strategy continues to look for opportunities in the space although we tread very carefully due to acceleration risks.

Shaun Burgess
Portfolio Manager & Fixed Income Analyst
Email | Bio

In addition to Shaun’s commentary here, it’s that time of year when the rest of the Team at Cumberland Advisors provide their Q4 Reviews.

Market Commentary - Cumberland Advisors - 2019 Q4 Strategy Reviews

We may discuss what we favor, cash positions, warning signs, and what we see as opportunities. Read more Q4 Reviews to learn about the thinking behind our positioning of portfolios and how we execute strategies at this link: https://www.cumber.com/2019-q4-reviews/

Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries

Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.

cumber map
Cumberland Advisors® is registered with the SEC under the Investment Advisers Act of 1940. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in the states where Cumberland Advisors is either registered or is a Notice Filer or where an exemption from such registration or filing is available. New accounts will not be accepted unless and until all local regulations have been satisfied. This presentation does not purport to be a complete description of our performance or investment services. Please feel free to forward our commentaries (with proper attribution) to others who may be interested. It is not our intention to state or imply in any manner that past results and profitability is an indication of future performance. All material presented is compiled from sources believed to be reliable. However, accuracy cannot be guaranteed.