Puerto Rico stepped up preparations for a sale of as much as $3.5 billion in bonds, a test of the financially troubled island's ability to access credit markets, the Wall Street Journal reported yesterday. The U.S. commonwealth, which is not eligible to file for chapter 9 bankruptcy, has hired bankers to manage the bond offering. While the government of Puerto Rico is seeking approval to sell up to $3.5 billion, many investors expect a deal of $2 billion to $3 billion and bonds with final maturities of 20 years. Once a staple of municipal-bond portfolios, Puerto Rico's bonds in recent months have been reeling, pushing yields to record highs. Bond prices and yields move in opposite directions. The island's shrinking economy and persistent budget deficits have sparked worries among investors, who fear Puerto Rico's precarious finances could lead to a restructuring of the U.S. commonwealth's $70 billion of debt.
