While hedge funds hold much of Puerto Rico’s troubled debt, individual investors own an estimated $15 billion in bonds — 22 percent of the island’s overall $68 billion public debt, the Associated Press reported yesterday. Many eagerly bought Puerto Rico bonds because they are exempt from state, local and federal taxes and were widely considered safe. Prices for Puerto Rican bonds have plummeted, devastating many investors in Puerto Rico and on the mainland. Some have had to delay retirement, find alternative sources for their children’s college funds or rejoin the workforce. Many hold out hope that a new federal aid package signed by President Barack Obama in June will at least limit their losses. The measure creates a federal control board to oversee Puerto Rico’s finances, supervise some debt restructuring and negotiate with creditors. Puerto Rico bonds rallied by some 20 percent that day and remained at that level even after the governor announced a moratorium on general obligation debt, said Puerto Rico financial adviser Jose Ivan Acosta. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
