Puerto Rico is expected to sell roughly $3 billion in bonds today at interest rates that are considerably lower than many investors in the municipal market had expected, providing a rare bright spot for the cash-squeezed island, the New York Times reported today. The lower yields, investors say, are being driven by a combination of factors, including a recent flow of investments in mutual funds that are large buyers of municipal bonds, Puerto Rico’s progress in closing its chronic budget gap, its improved financial disclosures and a general sense of relief that the commonwealth still has access to the debt market. The commonwealth’s fiscal agent, the Government Development Bank, also has hired an affiliate of a well-known restructuring firm, raising concerns among some investors that Puerto Rico is weighing a revamping of its existing debt load, even as it prepares to raise fresh funds. The hiring by Puerto Rico of James Millstein, a restructuring specialist, has raised questions over whether the commonwealth plans to revamp its existing debt while it is about to sell $3 billion in bonds to raise money. Given its status as a U.S. territory, Puerto Rico is not eligible to file for chapter 9 protection.
