"If the politicians lead us into a 'prioritization of payments' situation for Treasury Secretary Lew or an actual missed payment, there is nothing you can do to protect yourself from that!" are the ominous words that Kyle Bass uses to describe the farce that is rapidly approaching (and for now being ignored by stocks). Bass went on to pull no punches in his "disappointment" in JCPenney's performance (and dilution) coming as close as he can to saying "sell." But his piece de resistance was a dismal destruction of any silver lining for Puerto Rico and the significant implications that will have on Muni bonds in general.
On Default risk and "Un-hedgeable" implications:
On JCPenney - "Disappointed" - "didn't belive they needed to raise the capital... and now they have diluted us over 30%"
On Puerto Rico and the threat to the entire Muni market - "you look at their finances and you can only say - I have no clue how this can exist for very much longer"