Puerto Rico G/O and Pub Bld Auth bond conversion

msf

A couple of weeks ago, most PR bonds (G/O and PBA) were converted to a slew of other bonds, plus cash. This is as part of the settlement to get PR out of bankruptcy.

Puerto Rico’s direct debt will be reduced to $7.4 billion from $34.3 billion. General obligation (GO) and public building authority (PBA) bondholders will receive $7.4 billion in new GO bonds and a $7 billion cash consideration. An additional contingent value instrument (CVI) will allow creditors to benefit from a portion of the outperformance in sales tax collections as well. Annual debt service (inclusive of COFINA sales tax bonds) will be reduced to $1.15 billion from $4.2 billion, an over 70% reduction.

https://www.nuveen.com/en-us/insights/municipal-bond-investing/municipal-market-update

From EMMA (MSRB), here are the information docs for the replacement bonds:
10 coupon (current interest) bonds and 2 zero (capital appreciation) bonds
CVI bonds

Bonds (other than the CVI) that mature in 2033 or later are callable.

I held one G/O bond. It wasn't until today that the transactions and figures for the 13(!) bonds added up. This could have been confusion on the PR end, or it could have been poorly recorded by my broker's clearing house (Pershing).

For example, early on the broker was reporting a 100% loss on the original bond, meaning that there were zero proceeds. Yet there were proceeds - part used to pay the cash (mentioned in the Nuveen piece, above), and part used to pay for the bakers dozen bonds that were issued as replacements.

Has anyone else had a bond replaced? Do your broker's figures make any better sense?

bee

Do any of these PR bonds convert to ocean front property?

If so, I am in!

msf

Not that I know of, but some of the CVI bonds (not the one I got) are tied to the amount of rum tax collected. So drink up!

LewisBraham

bee

Thank you @ LewisBraham

That brought an anger tear to my eye. Soon after that airing Hurricane Maria Struck the island in Sept 2017.

Another look at where the island is still struggling:
puerto-rico-has-not-recovered-from-hurricane-maria

msf

As much as I like John Oliver and feel his pieces including this one are excellent, it is nevertheless dated. As noted in the Nuveen excerpt above, and in the NBC News page (NBC video/AP text) below, about half ($34.3B) of the $70B debt described by Oliver was since restructured into a $7.4B debt, plus $7B in cash payments. That's a reduction of the direct debt (general obligations of the PR government) by over half. The cost of servicing that debt is cut from 25% of the budget to 7%.

This sounds like what was being asked for in the Oliver video. Though as NBC notes, dealing with the remaining (revenue bond) debt will be more difficult.

https://www.nbcnews.com/news/latino/puerto-rico-formally-exits-bankruptcy-largest-public-debt-restructurin-rcna20054

From 2016 until now, many of the PR bonds, including mine, were nonperforming. That was necessary. This "pause" was not mentioned in the Oliver video, perhaps because it was just a stop gap measure.

Could we please move past claims that "Sixty-four Puerto Ricans died during Maria" as stated in the Sept 18, 2018 linked article? Even at the time of the hurricane, let alone a year later, it was obvious that the devastation was much worse. And on Aug 29, 2018, the BBC reported "Officials in Puerto Rico now say 2,975 people died following Hurricane Maria."
https://www.bbc.com/news/world-us-canada-45338080

To add insult to injury, while Florida and Texas were getting substantial federal assistance after being hit by hurricanes in 2017, this was the photo op for federal aid to Puerto Rico:

Old_Joe

Sick. Just plain sick.