Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
No takers? I do believe one of my funds does still hold a very small stake in PR bonds. Don't ask me which one. Some years ago, PR was still a tax haven. Big Money would make their HQ in PR, and of course they would hire employees down there, too. But the economy there is a black hole. There is talk of making PR a State, along with D.C. But that idea has been floated more than once before. I think the people of PR prefer the territorial arrangement: they can have their cake and eat it, too. There are somehow, some advantages they would lose, with Statehood. Also, my friend from PR has told me stories of the poverty that his family lived in, before he came to the States. They were not alone.
I know a couple of individuals who own a few PR bonds. Most but not all from these small samples are nonperforming. One went from performing to nonperforming in the past couple of years. Their prices have bounced all over the map, with some bonds holding most of their value, while one dropped to 60% or so of par, rebounded to 80%, declined back into the 60s, and now sits around 70%. (It will depend on the source of revenue backing the bonds.)
Needless to say, PR is not exercising its call options on these or other bonds. So they may be outstanding for decades.
If you like speculating on fairly volatile non-income-producing assets, you could look at these bonds. Or if you feel you have special insight into the various negotiations that seem to be forever ongoing, you could try to take advantage of that knowledge. Otherwise, this is not an asset class I would consider getting into on my own.
A fund might dabble in the bonds for capital appreciation, playing on the volatility or the politics. I think that's fine, but something best left to the professional managers.
Comments
Needless to say, PR is not exercising its call options on these or other bonds. So they may be outstanding for decades.
If you like speculating on fairly volatile non-income-producing assets, you could look at these bonds. Or if you feel you have special insight into the various negotiations that seem to be forever ongoing, you could try to take advantage of that knowledge. Otherwise, this is not an asset class I would consider getting into on my own.
A fund might dabble in the bonds for capital appreciation, playing on the volatility or the politics. I think that's fine, but something best left to the professional managers.