Hedge funds that own Puerto Rico general obligation bonds are fracturing into competing groups as they jockey for priority in the U.S. territory’s financial restructuring, WSJ Pro Bankruptcy reported. Monarch Alternative Capital LP, GoldenTree Asset Management LP and Whitebox Advisors LLC have formed a committee to differentiate themselves from other general obligation bondholders whose claims are in dispute, according to court records filed on Tuesday. The committee’s formation is partly a reaction to Puerto Rico’s financial overseers, who are taking steps to favor some general obligations over others. Last month the oversight board running Puerto Rico’s bankruptcy questioned the validity of $6 billion in general obligations, saying that they layered more debt on the territory than its constitution allows. The disputed bonds were sold after March 2012 and include Puerto Rico’s 2014 sale of $3.5 billion of high-yielding general obligations, the municipal market’s largest-ever junk-bond issuance.
