FYI: Holders of Puerto Rico's bonds are getting a harsh lesson in being careful what they wish for.
Investors cheered last year after U.S. lawmakers created a fiscal oversight board for Puerto Rico, with the goal of putting the island's finances in order. Traders pushed up Puerto Rico debt values by more than 5 percent in the four months after June. This new oversight committee was going to be great for bondholders.
High Hopes:
But a funny thing happened on the way to the payday:
On March 13, the federal oversight board approved a budget that devoted much less money to debt investors than markets had anticipated, and traders' sentiment shifted rapidly. Bond prices plunged toward record lows. Values still have much further to fall if this budget is anything close to a final version.
Regards,
Ted
https://www.bloomberg.com/gadfly/articles/2017-03-22/puerto-rico-bondholders-put-their-trust-in-wrong-ally
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