Tag Archives: Puerto Rico

Puerto Rico’s Crisis Deals a Blow to Municipal-Bond Funds

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“In a low-interest rate world, Puerto Rico’s bonds have offered investors juicy yields over the past several years. Puerto Rico’s $3.5 billion in general-obligation bonds issued in 2014 initially had a yield of 8.7%. The yield on 10-year U.S. Treasury notes, by contrast, hovered between 2% and 3% last year.  But now investors are getting a fast lesson on the risk that comes with those sorts of high yields. More than half of all U.S. municipal-bond funds, or 298 of 565, have invested in Puerto Rico’s debt, according to the most recent fund holdings compiled by Morningstar.”

http://blogs.wsj.com/moneybeat/2015/06/30/puerto-ricos-crisis-deals-a-blow-to-municipal-bond-funds/

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Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable’

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“Puerto Rico’s governor, saying he needs to pull the island out of a ‘death spiral,’ has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions. It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state. A broad restructuring by Puerto Rico sets the stage for an unprecedented test of the United States municipal bond market, which cities and states rely on to pay for their most basic needs, like road construction and public hospitals.”

http://www.nytimes.com/2015/06/29/business/dealbook/puerto-ricos-governor-says-islands-debts-are-not-payable.html

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Peter Schiff: How the Media Deceived Me

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“I’ve purchased property there, I have an office there, I have employees there so I’m developing my connections in Puerto Rico and they’re going to grow and ultimately, I’m going to be there. I just haven’t made a decision as to exactly when. I have family here, I have a son, so it keeps me here even though I would prefer not to be. Certainly from a tax perspective and even from a lifestyle perspective I think spending more time in Puerto Rico would be the right thing to do so ultimately, I am going to be out there. I think more and more Americans from the mainland are going to be washing up on Puerto Rican beaches because the opportunities and the incentives are really, really too big to pass up.”

http://www.thedailybell.com/exclusive-interviews/35628/Anthony-Wile-Peter-Schiff-How-the-Media-Deceived-Me/

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The Biggest Opportunity for Americans to Reduce Their Taxes

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“Puerto Rico is different because it is actually part of the US, and it has a unique status because it’s not a state and it’s not a foreign country. It’s what is known as a commonwealth or a territory; and the way it’s set up—and the way it has existed for over 100 years—is that Puerto Rican residents are all US citizens, but they do not have to pay US federal taxes on their Puerto Rican-sourced income. They pay taxes on that income to the Puerto Rican government. And this arrangement allows for the Puerto Rican government to offer incentives to mainland Americans who move to Puerto Rico that pretty much no other jurisdiction can offer.”

http://www.internationalman.com/articles/the-biggest-opportunity-for-americans-to-reduce-their-taxes

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Puerto Rico bonds crash high-yield municipal debt party

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“The island of Puerto Rico shocked investors by passing a law that gives its government-controlled corporations the ability to restructure their debt. Until that point, many investors assumed that the government of the U.S. territory would stand fully behind the bonds, although there was never a promise to do so.  The impact has been dramatic because Puerto Rico’s government and related entities have $73 billion of outstanding debt, nearly $20,000 for every resident of the island, and it has been widely held by U.S. high-yield muni funds. Some of the biggest funds were heavily overweight in Puerto Rican debt and have taken a battering as a result.”

http://www.chicagotribune.com/business/sns-rt-us-usa-municipals-puertorico-20140716,0,4827975,full.story

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Real-Estate Investors See No Problem With Puerto Rico

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“There have been about $1 billion in upscale-property deals on the island over the past couple of years, local investors say, even as the island’s economy has fallen into a tailspin and analysts raise the specter of default.  Some see their investments as longer-term bets on Puerto Rico’s eventual turnaround, and on tourists’ willingness to overlook the island’s credit concerns. Others are betting that changes to Puerto Rico’s tax code, which eliminates most taxes on investments, will lure thousands of wealthy U.S. citizens.  The Puerto Rican government says so far 280 individuals have relocated to the island for tax reasons, while another 250 businesses have moved to the island.”

http://finance.yahoo.com/news/real-estate-investors-see-no-013300405.html

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Puerto Rico as an Alternative to Renunciation

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“What if I were to tell you that you can gain many of the tax benefits of expatriation without giving up your US citizenship?  Puerto Ricans are US citizens, and the currency is the US dollar. No passport is required for travel to Puerto Rico by US citizens. However, Puerto Rico has its own tax system.  Bona fide residents of Puerto Rico who have Puerto Rican-sourced income are exempt from US taxation.  Under the new law, a US taxpayer who gains Puerto Rican tax residency will be exempt on his short-term and long-term capital gain income for US federal and Puerto Rican tax purposes.  Dividend and portfolio interest income are also exempt from Puerto Rican tax.”

http://www.internationalman.com/articles/puerto-rico-as-an-alternative-to-renunciation

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Is Puerto Rico Really the Perfect Tax Haven?

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“Anyone who becomes a bona-fide resident of Puerto Rico is now eligible for the following benefits, courtesy of a new law, Act 22:  100% tax exemption from Puerto Rico income taxes on all dividends and interest payments;  100% tax exemption from Puerto Rico income taxes on all short- and long-term capital gains accrued since becoming resident in the territory.  The law is ideal for wealthy US citizens or green card holders who are now paying federal income taxes as high as 39.6% (plus the 3.8% Obamacare tax) on passive income and want to reduce their federal tax liability. If you reside in Puerto Rico and live off your portfolio income, you pay zero tax in the US or Puerto Rico.”

http://www.nestmann.com/is-puerto-rico-really-the-perfect-tax-haven

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How To Play The Puerto Rican Economic Recovery

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“The Puerto Rican government is making substantial efforts to turn the economy out of an eight-year-long recession.  Improved real estate value and business conditions will provide catalysts for Puerto Rican bank stocks.  Watch the share price of Popular, Inc. to lead the way for three smaller banks on the island.”

http://seekingalpha.com/article/2176073-how-to-play-the-puerto-rican-economic-recovery

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Puerto Rico Budget Won’t Include Borrowing, Official Says

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“For the first time in two decades, Puerto Rico plans to balance its budget without selling debt, said Governor Alejandro Garcia Padilla’s chief of staff.  Garcia Padilla’s proposed financial plan for the fiscal year beginning July 1 relies mostly on spending cuts. The administration will also raise additional funds through ‘revenue enhancements.’  The 42-year-old governor will release the plan as soon as today. He’s set to give his State of the Commonwealth speech at 5:30 p.m. local time, where he will also announce a four-year roadmap that will ‘transform’ Puerto Rico’s economy and social demographics by 2018, Vila Biaggi said.”

http://www.bloomberg.com/news/2014-04-28/puerto-rico-budget-won-t-include-borrowing-official-says.html

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