And why not, they may even decide to renege on their uninsured debt as well. Along with lots and lots of general obligation bonds, it created almost 20 types of special revenue bonds. Many investment firms have limits on how much lower-ranked debt they can hold.
Municipal bonds are very seldom voided, and there is no precedent for such a step under Promesa, the bankruptcy-like law enacted by Congress to handle Puerto Rico… In the 18 months since Hurricane Maria swept across Puerto Rico, the island has struggled to recover from the destruction left in its wake. This list includes investable products traded on certain exchanges currently linked to this selection of indices. Puerto Rico bonds Blogs, Comments and Archive News on Economictimes.com I'm a former Forbes columnist, investment advisor and publisher of the Forbes/Lehmann Distressed Municipal Debt Report. The MSRB, its officers, directors, employees, agents, consultants, and licensors make, and have made, no recommendations regarding any of the securities or other investment vehicles, referred to or described in the Service.The Service is reproduced by permission of the MSRB under a non-exclusive license. And when the choice comes down to funding public pensions, keeping up government services, or paying back bondholders, bondholders are increasingly likely to lose out. Puerto Rico has gone so far on its insured issues that it now collects the interest payments as they come due from the insurer, and keeping the money rather than pay out interest to bondholders! As a lifetime investor in postage stamps, I'veI'm a former Forbes columnist, investment advisor and publisher of the Forbes/Lehmann Distressed Municipal Debt Report. Now is the time for change. It issued bonds backed by sales taxes, bonds backed by highway tolls, and bonds backed by water bills, gas taxes, and the rents on public buildings.This was not unique to the island. No index-linked product details are currently available. Altogether, the NFMA estimates that borrowers could pay between $2 billion and $6 billion in additional interest if Swain’s ruling stands.Those costs will be borne directly by the municipalities and states that issue the bonds, which ultimately means residents will pick up the tab in higher taxes, tolls, or user fees. Chicago’s general obligation bonds yielded around 4.2% on average over the past month, for example, versus the 3.3% yield on bonds backed by O’Hare airport revenues.But Puerto Rico’s bankruptcy has raised questions about whether special revenue bonds are really as safe as investors thought.“What we’ve found is that the promises that were made when times were good aren’t necessarily there when times are bad,” says Jane Ridley, a senior director at credit ratings agency Standard & Poor’s. Although that wave never happened, muni investors shouldn’t ignore what’s currently going on in Puerto Rico, because it could have an impact on credit protections for some types of muni bonds. My latest publication titled "Moneystamps - The Safe-Haven Investment In An Unsafe World" is available on Amazon. For monoline bond insurers the future choices are clearer. They began in earnest in 1996 when the US Congress As Puerto Rico’s economy declined, tax revenues did too. Find everything about Puerto Rico municipal bonds. A man is confronted with a closed sign at the Douglas County Treasurer's office in Omaha, Neb. These funds tend to have relatively stable share prices, and higher than average yields.Investors who suspect that the stock market may be about to decline can take action to reduce the...Welcome to MunicipalBonds.com.
In 2007, the first COFINA bonds received solid investment-grade ratings, just a year after a budget crisis shut the island’s government down for two weeks. This was, of course, a stretch in logic but was supported by Moody’s and Standard & Poor’s so long as they could get a piece of the fees on each deal for rendering their AAA imprimatur. And when the new bonds were issued in mid-February, the swap was so poorly structured that many US-based retail investors found they got far less than they were promised.The COFINA bondholders also agreed to give back $456 million in annual sales tax revenues to the government (nearly half of the yearly revenues that had initially been pledged), which can use the funds to pay the general obligation bondholders, among others.
WE HEREBY DISCLAIM ALL REPRESENTATIONS AND WARRANTIES (EXPRESS OR IMPLIED), BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE REGARDING THE SERVICE. They claimed the money was rightfully theirs, since the Puerto Rican Constitution says that general obligation bonds must be paid first with “all available” resources.Places like Chicago and New York state have issued sales tax bonds similar to Puerto Rico’s. Jayden Sangha Aug 05, 2020. Were Judge Swain to allow it, that decision, too, would be appealed—given the sums involved, likely all the way to the Supreme Court.Whatever the board’s motivation, one thing is certain: it has made investors even more cautious about the potential machinations hard-up municipalities are willing to engage in when the money runs low. Investors have feared that any outcome which undermines the COFINA’s iron-clad hold on the sales taxes could also upend long-held assumptions about many other bond offerings built around gas taxes, highway tolls, and other specific revenue streams.This has been an “existential issue for the muni market,” says Peter Block, head of municipal credit strategy at Ramirez & Co. “Who owns this revenue?”After hard-fought negotiations, the judge overseeing the bankruptcy, US District Court Judge Laura Taylor Swain, recently approved a settlement in which both sides can claim victory, of sorts. Long, like many analysts, believe she got it wrong, and the dispute will likely be litigated all the way to the Supreme Court.
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