Tag Archives: Puerto Rico

Stone Lion Capital Partners Suspends Redemptions in Credit Hedge Funds

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“Stone Lion, founded in 2008 by Bear Stearns & Co. Inc. veterans Gregory Hanley and Alan Mintz, is in a similar malaise, facing heavy losses on so-called distressed investments including junk bonds, post reorganization equities and other special situations, people familiar with the matter said.  Its oldest set of credit funds, which manage $400 million altogether, received ‘substantial redemption requests,’ precipitating the decision, the firm said in a statement. The firm didn’t give a time frame for when the money would be returned.  The firm continues to operate several other funds, including one that bets on Puerto Rico’s economic recovery.”

http://www.wsj.com/articles/stone-lion-capital-partners-suspends-redemptions-in-its-oldest-fund-1449870782

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Water rationing, tax and rate hikes add to woes of Puerto Ricans

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“Puerto Ricans are learning to live without water on an island that already was suffering an economic crisis.  Rationing rules that had meant water coming through the pipes only one day out of three will increase the cutoff to one day out of four starting next week, government officials say.  The situation has grown so dire that Puerto Rico’s water and sewer company announced that it would spend about $200,000 to use ‘cloud seeding’ in hopes of creating rain clouds over three of the island’s main reservoirs.  The drought comes as Puerto Rico struggles in a nearly decade-long economic slump that has hit the government’s coffers and led authorities to raise the sales tax, even on bottled water.”

http://www.usnews.com/news/world/articles/2015/08/06/puerto-ricans-face-punishing-drought-amid-economic-slump

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Puerto Rico’s crisis illustrates the risks of minimum wage hikes

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“Only 40 percent of the adult population on the island is employed or looking for a job — versus a U.S. labor force participation rate of 63 percent.  Of course, many Puerto Ricans work for less than the minimum — in the black-market economy, which is untaxed. In other words, the minimum wage also helps explain Puerto Rico’s lack of revenue with which to service its debt.  Also killing the demand for, and supply of, labor are the island’s onerous overtime, paid-vacation and job-security regulations.  And even at the minimum wage, full-time work in Puerto Rico pays less than the combined package of welfare, Medicaid and food stamp benefits for which a family of three might qualify.”

https://www.washingtonpost.com/opinions/puerto-ricos-lesson-for-the-mainland/2015/07/08/24e63970-25ad-11e5-b77f-eb13a215f593_story.html

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Should Puerto Rico Shut Down Schools to Pay Its Debts?

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“The hedge fund report, authored by a trio of former International Monetary Fund economists, noted that Puerto Rico’s education spending had risen 39 percent in a decade during which school enrollment actually fell by a quarter. Surely, there must have been some unnecessary fat in the system to cut.  It’s easy to understand why this might seem outrageous. Firing teachers in the middle of what’s essentially a nine-year depression seems like a good way to further exacerbate Puerto Rican unemployment, possibly while sacrificing some childrens’ educations.”

http://www.slate.com/blogs/moneybox/2015/08/04/puerto_rico_s_debt_crisis_hedge_funds_say_the_island_should_shut_down_schools.html

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NYC Rips Hedge Funds Over Puerto Rico, While Giving Them Billions

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“Hedge funds that hold billions of dollars of Puerto Rico’s high-yield debt ‘are feeding off the misery of the island,’ Mark-Viverito, speaker of the City Council, told a cheering crowd last week at a City Hall rally. She accused the funds of trying to gut wages, education and health care for the island’s 3.5 million residents.  What she and other critics who spoke that day didn’t say was that New York taxpayers and retirees entrust some of those hedge funds with more than $2.2 billion of the city’s $166 billion in pension assets.  The Puerto Rican government said officials need to cut spending and take other steps to revive the economy, such as cutting the island’s minimum wage below the federal $7.25 level.”

http://www.bloomberg.com/politics/articles/2015-08-06/nyc-rips-hedge-funds-over-puerto-rico-while-giving-them-billions

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Amid economic crisis, Puerto Rico cuts spending by $150 million

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“Puerto Rico’s government says that in recent years it has reduced certain expenditures by nearly $150 million amid a worsening economic crisis.  Budget director Luis Cruz says the cost of contracting for professional services has dropped by more than 55 percent. He says the government of the U.S. territory also has cut contracts related to services purchased by $93 million.  Cruz said late Monday that the government also has moved public offices from private buildings to state-owned locations for nearly $20 million in savings. Puerto Rico is entering its ninth year of recession and is struggling with $72 billion in public debt that Gov. Alejandro García Padilla has said is unpayable.”

http://latino.foxnews.com/latino/money/2015/07/22/amid-economic-crisis-puerto-rico-cuts-spending-by-150-million/

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The Man Who Sowed the Seeds of Puerto Rico’s Collapse

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“It is indeed a crisis but one that was, to an embarrassing extent, made right here in America.  It was foisted on Puerto Ricans by one lousy New Dealer in particular. His name was Rexford Guy Tugwell.  By 1941, Rexford Guy Tugwell had behind him a 20-year career of pontificating for big government and managing expensive government flops. Somehow that gave Franklin Roosevelt the idea of naming him governor of Puerto Rico. What Tugwell did for the mainland, he could now do for an island. Maybe this central planning stuff works better if you work small, right?”

http://fee.org/anythingpeaceful/detail/the-man-who-sowed-the-seeds-of-puerto-ricos-collapse

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Economic exodus means two-thirds of Puerto Ricans may soon live in US

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“Unable to pay its $73bn debt, Puerto Rico has begun rationing water,closing schools and watching its healthcare system collapse and 45% of its people living in poverty. Emigration to the mainland has accelerated in recent years, activists say, and data shows that from 2003 to 2013 there was a population swing of more than 1.5 million people. As a US territory, the semi-autonomous island does not have the same authorities that allow others to file for Chapter 9 bankruptcy, as Detroit did to cope with its own disastrous finances. Today, 60% of Puerto Ricans live in the States and 40% on the island according to a 2014 Pew report, with most moving to Florida.”

http://www.theguardian.com/world/2015/jul/02/puerto-rico-economy-exodus-us-mainland

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Is your bond fund invested in Puerto Rico?

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“Some of the top-performing municipal bond funds over the past five years have held huge stakes in Puerto Rican debt. Now that Puerto Rico’s governor has said the island’s roughly $72 billion in debts are ‘not payable’ and asked for U.S. bankruptcy protection for the commonwealth, investors in those funds may take a big hit.  U.S. bond funds have an $11.3 billion total exposure to Puerto Rican debt as of June 29, according to mutual fund firm research Morningstar.  See a list of 20 bond funds with the most exposure to Puerto Rican debt below.  U.S. mutual funds are only required to disclose their holdings quarterly.”

http://www.cnbc.com/id/102798839

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Trouble Could Be Looming for Puerto Rico Bond Insurers

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“Assured Guaranty Ltd., MBIA Inc. and Radian Group Inc. have ‘substantial’ exposure to Puerto Rico bonds that in some cases outstrip the assets available to cover unexpected losses, according to Moody’s.  A 2028 bond without bond insurance recently traded at about 74 cents on the dollar, according to the Electronic Municipal Market Access website.  Some municipal-bond investors questioned the value of bond insurance following the financial crisis, when bond insurers suffered losses after guaranteeing risky mortgage-backed securities and lost their top credit ratings. The number of new municipal bonds that carry bond insurance has fallen in recent years.”

http://blogs.wsj.com/moneybeat/2014/07/07/trouble-could-be-looming-for-puerto-rico-bond-insurers/

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