Puerto Rico Bonds Are Plunging Again

Tyler Durden's picture

Puerto Rico bonds are in the midst of the biggest three-day rout since April 2016, when island officials advanced a moratorium bill that paved the way for the first default on its general-obligation debt, according to data compiled by Bloomberg.

As The FT reports, Puerto Rico plans to begin restructuring talks with its multitude of creditors “immediately” after its turnround plan was on Monday approved by the commonwealth’s federal oversight board, according to the island’s governor.

The next steps are implementing some of the promised economic reforms and to “aggressively pursue” restructuring talks with creditors, Puerto Rican governor Ricardo Rosselló told the FT.

“We will reach out to them immediately and move quickly,” he said. “This [turnround plan] sends a clear signal to the market that there is a paradigm change in our credibility compared to the last administration.”

And the reaction in Muni bonds is clear...

As the federal oversight board’s approval of a fiscal recovery plan Monday, covers less than a quarter of the debt payments due from 2018 through 2026, leaving bondholders facing steeper losses than they did under the governor’s previous proposal.

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peterk's picture

ihave nothing to say i just want to be the first post

giovanni_f's picture

my name is Bond, James Puertorico Bond.

Max Damage's picture

when is the USA restructuring since they can't print enough toilet paper to cover it

peterk's picture

actually in a world bond market rout, these lesser countries will

be the first to crack.

Need that  low taken out on the chart before things get serious

 

ALso in AUSTRALIA  today,  banks started to RAISE interest rate independeantly

of the RBA, just a little. Its unusual. Liquidity crunch

Rising rates here will kill eveerything quicksmart

ParkAveFlasher's picture

PR isn't a country.  Quicksmart isn't a word.

cro_maat's picture

This is the "crux of the bisquit" (Frank Zappa RIP)

PR is a wholly owned subsidiary of the USSA DC Vichy Corporation and is therefore said corporations responsibilty.

Is this restructuring the first move by DC to restructure $20T with global creditors? Maybe Spain will buy PR back for 10 cents on the $.

Teja's picture

Nice try. Spain won't buy. Got their own problems already. Try ask the Chinese.

But WHAT IF PR leaves the US$ and issues a PR$, converting their debts 1:1? That's what everybody said the Greek should have done.

Not sure if they can do that without declaring their independence. Would not be the first time to have one country with multiple currencies. Better than the other way round.

 

gatorengineer's picture

We can arrange to ship you some insanely optimistic homebuilders and Purchasing managers, in exchange for a Kangaroo and a Wallaby to be named later....

Sequoia's picture

Things will get interesting soon.  The real economy peaked in mid April and has been steadily weakening almost everywhere.  The FED is just trying desperatsly to maintain what little credibility it has with the sheep.  Also insurance companies needs some yield or they will implode like the banks did in 2007.

Last of the Middle Class's picture

Puerto Rico bond??? LMAO. Spit coffee on that one. Less they pay off in venezuelan cocoa I"m out.

cro_maat's picture

But it is backed by the full faith and credit of the USSA! What could go wrong?

buzzsaw99's picture

i'm sure the goldman sachs owned white house has an angle

SweetDougisaTwat's picture

Fucking spics.  Worthless Third World turds.  Fucking grease balls.

Dragon HAwk's picture

Remember how much they fought being offered State Hood..

We dodged that one. rot is Hell P.R.

gregga777's picture

Debt that can't be repaid won't be repaid.  Puerto Rico's creditors apparent do not understand the basic facts of their own financial rackets.  And, try as they might, they can't repossess a sovereign state.  

 

 

cro_maat's picture

The first part is correct. However, PR is not a sovereign state. PR is a wholly owned territory of the USSA DC corporation.

This was made very clear in Bidwell v Barnes: http://www.supremelaw.org/decs/downes/

In Jusitce Harlan's dissent he spells it out very clearly:

"I agree in holding that Porto Rico -- at least after the ratification of the treaty with Spain -- became a part of the United States within the meaning of the section of the Constitution enumerating the powers of Congress, and providing the 'all duties, imposts, and excises shall be uniform throughout the United States.'

In view, however, of the importance of the questions in this case, and of the consequences that will follow any conclusion reached by the court, I deem it appropriate -- without rediscussing the principal questions presented -- to add some observations suggested by certain passages in opinions just delivered in support of the judgment.

 

The idea prevails with some-indeed, it found expression in arguments at the bar-that we have in this country substantially or practically two national governments; one to be maintained under the Constitution, with all its restrictions; the other to be maintained by Congress outside and independently of that instrument, by exercising such powers as other nations of the earth are accustomed to exercise."

 

Ignorance is bliss's picture

I worked in P.R. for many years. The infrastructure is in terrible shape. The era of cheap PR government debt is over.
Infrastructure including power, water, and roads will continue to deteriorate. The government is also the primary supplier of jobs via extreme cronyism, now its choking on its own weight. Productive enterprises are tightly integrated with the PR government. However, as the government defaults then the domino effect will collapse the larger economy. The jobless rate will soar. The crime rate is already bad. I would imagine it too will soar. Would the last productive person on the Island please turn off the lights on their way to N.Y. or Florida. I don't think Peter Shift or Mike Maloney thought things through before relocating to their island tax haven.

Omen IV's picture

with $75 Billion in debt and $50 Billion in pension obligations - the PR model for governance is dead - there is no private industry that can survive with cheap imports from the third world - utilities and distribution costs are too high

25-35% already have left - if the bonds are not paid and the pensions are paid - the fallout in the muni market will be enormous

roadhazard's picture

Puerto Rico is like Greece always at deaths door but never dying.

Vardaman's picture

The Puerto Rican national anthem - "Attention, K-Mart shoppers..."