This pandemic provides an opportunity for distressed bond issuers to come together, declare a financial emergency and essentially renege on future interest and principal payments. Municipal Bonds and Taxes: What Investors Need To Know. See current Puerto Rico bond list and quotes: Puerto Rico Municipal Bonds . Some of these municipalities only have enough cash to either pay employees or to make interest payments. Money manager Glenn Ryhanych sat in his office in Virginia, waiting for a final resolution of bankrupt Puerto Rico’s nearly two-year saga with its $17.6 billion of sales-tax-backed bonds. One solution is to focus on selling insurance to the bondholders rather than the issuers. Opinions expressed by Forbes Contributors are their own. Puerto Rico first defaulted on its general obligation bonds in July 2016, when it failed to pay roughly $1 billion owed to its creditors and hasn't made any payments since. Puerto Rico Municipal Bond Quotes, Rates, Yields, New Issues, Defaults and Ratings News. Now is the time for change. New Species of Comb Jelly Discovered Near Puerto Rico November 30, 2020 9:37 am Nature World News Scientists from the National Oceanic and Atmospheric Administration Fisheries (NOAA) Fisheries research team virtually discovered a new comb jelly species near Puerto Rico.First seen during a 2015 underwater expedition, the newly-named … At the time, there were concerns that Puerto Rico could be the tip of the iceberg in a wave of new municipal … Hence, there are an increasing number of instances of municipalities refusing to make their contractual debt service payments thereby requiring the bond insurers to step up and pay. The Investment Company Institute reported municipal bond funds saw $2.675 billion of inflows in the latest reporting week. Puerto Rico … The MSRB accepts no responsibility for the accuracy of the reproduction of the Service or that Service is current. Its success, however, was unrelated to its municipal bond underwriting. The renewed attention from traditional municipal-bond investors is welcome news for those hedge funds, who hold about 30 percent of Puerto Rico’s … The Boston-based First Circuit court on Tuesday determined that municipalities are not required to make payments on debt secured by special … (AP ... [+] Photo/Nati Harnik). The insurance fee structure was furthermore negatively impacted when S&P, and eventually the other rating agencies, downgraded the United States from AAA to AA+. The 2008 Financial Crisis had a devastating effect on the monoline bond insurance industry, which used to be dominated by names like Ambac Financial, MBIA Latest. The MSRB, its officers, directors, employees, agents, consultants, and licensors shall not be liable or responsible to you or anyone else for any losses, injuries, damages, costs, expenses or claims caused by, arising out of or relating to the following: (a) acts, omissions, occurrences or contingencies beyond their control; (b) service interruptions or performance failures, such as those that result from the use of telecommunications facilities that are outside of their control, including the Internet: (c) negligence, gross negligence or willful misconduct in procuring, compiling, interpreting, editing, writing, reporting or delivering any of the content and material; (d) lost, stolen, late, corrupted, misdirected, failed, incomplete or delayed transmissions by anyone using the Service, including, but not limited to, any technical malfunctions, human error, computer viruses, lost data transmissions, omissions, interruptions, deletions, defects, hyperlink failures or line failures of any telephone network, computer equipment, software or any combination thereof; (e) damage to your computer systems, equipment, software, data or other tangible or intangible property resulting from or sustained in connection with your use of the Service; and/or (f) any disruption of business, lost sales or lost profits or any punitive, exemplary, indirect, special, incidental, or consequential damages associated or in connection with, resulting from or arising out of any use of the Service or the content and material in the Service. These funds tend to have relatively stable share prices, and higher than average yields. Creating a properly diversified portfolio can be a difficult proposition, especially when... Low Volatility ETFs invest in securities with low volatility characteristics. The first was that interest rates declined to where the insurance fees dropped as much as 80 percent. © 2020 Forbes Media LLC. Miranda on Puerto Rico: ... deeply disappointing to countless citizens of Puerto Rico and investors in Commonwealth bonds." We can help you secure the top rates available. In my view, the pandemic has accelerated that crisis point. Welcome to The Puerto Rican government-debt crisis is a financial crisis affecting the government of Puerto Rico. Full coverage and live updates on the Coronavirus, I'm a former Forbes columnist, investment advisor and publisher of the Forbes/Lehmann Distressed Municipal Debt Report. My latest publication titled "Moneystamps - The Safe-Haven Investment In An Unsafe World" is available on Amazon. Puerto Rico has reached agreement with a large portion of its general obligation bond holders—and the holders of the constitutionally protected “Puerto Rico Building Authority bonds.”. ... Get the latest breaking news delivered straight to your inbox. Still, they forged on, but failed to convince bond buyers that their insurance was worth more than the credit enhancement differential which had become miniscule. Bondholders have yet to be heard from. I'm a former Forbes columnist, investment advisor and publisher of the Forbes/Lehmann Distressed Municipal Debt Report. Even investors in single-state municipal bond funds are likely to have some exposure to the heavily indebted economy. We are seeing numerous municipalities assuming that, since they paid for the bond insurance, they are entitled to its benefits. A second negative event for bond insurers since 2008 has been a redefining of just who is being insured. Check your email and confirm your subscription to complete your personalized experience. The MSRB and its officers, directors, employees, agents, consultants, and licensors shall have no liability in tort, contract, or otherwise (and as permitted by law, product liability) to you or anyone else for any reason associated or in connection with, resulting from or arising out of your use of the Service. I've published a number of catalogs and books on philately. When Puerto Rico declared a form of bankruptcy in May, it was the largest municipal bankruptcy debt in U.S. history. Only one insurer, Assured Guaranty, came through the crisis relatively unscathed and rose to become the industry leader from a previous third or fourth place. Please contact us to speak with a highly experienced and registered Durig Advisor, who puts your interests first! Their choice is obvious. Puerto Rico is responsible for approximately $13 billion of outstanding GO bonds. Preliminary voting results were announced last week. 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’s debt crisis. The transaction data provided through the Real-Time Transaction Subscription Service represents municipal securities transaction data made available by brokers, dealers, and municipal securities dealers to the MSRB and related information. Breaking News & Recent Headlines. Currently, Puerto Rico bonds account for 92% of the default index, so as Puerto Rico bond prices go, so goes the S&P Municipal Bond Defaulted Index, which is up 15.4% MTD as of August 20, 2018. Puerto Rico "rev" Trades - Find everything about Puerto Rico municipal bonds. Puerto Rico’s more than $74.8 billion in debt and $49 billion in pension system obligations surpasses Detroit, Mich.’s $18 billion bankruptcy in 2013. Join other Institutional Investors receiving FREE personalized market updates and research. But the industry shrunk dramatically and the seeds for future troubles soon became clear. By Robert Slavin For monoline bond insurers the future choices are clearer. Merrill is hardly the first firm to run into trouble with the collapse of Puerto Rico bonds. A man is confronted with a closed sign at the Douglas County Treasurer's office in Omaha, Neb. Join other Individual Investors receiving FREE personalized market updates and research. For too long, bond insurance has been treated as a credit enhancement tool. The U.S. Supreme Court on Monday declined to take up a dispute that has roiled the $3.8 trillion U.S. municipal bond market over payments on special revenue bonds that grew out of Puerto Rico… Accrued Interest: Definition, Formula, and Example, General Obligation vs. Revenue Bonds: A Guide, The Municipal/Treasury Ratio: How Investors Should Use It, 25 Universities With Attractive Municipal Bonds, Bond Investment Strategies: Ladders, Barbells and Bullets, Zero Coupon Muni Bonds – What You Need to Know, Municipal Bond Analysis: 6 Bond Market Indicators, Municipal Bonds Trading Activity Screener, Municipal Bond Terms That Investors Need to Know, 10 ETFs for Risk Reduction in Your Portfolio. Your personalized experience is almost ready. In theory, this ignoring of traditional underwriting principles was justified on the assumption that the insurer was writing coverage to a zero losses standard. This led to then downgrading the monoline bond insurers as well as the credit enhancement they actually could render. You may opt-out by. As a lifetime investor in postage stamps, I've written and advised extensively on philately, see my website. 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. Puerto Rico’s bankruptcy, with $74 billion in debt at stake, is the largest municipal default in history. Puerto Rico Municipal Bond News: 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! The short-term effect, however, may well have very long-term implications for the finances of these entities. Meantime, creditors overwhelmingly approved a plan to restructure bonds issued by Puerto Rico’s Government Development Bank. Such transaction data and/or related information may not exist for all municipal securities and may not be required to be submitted to the MSRB for certain types of municipal securities transactions. Two major changes came out of the financial crisis that threatens the health of this important industry. 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. Analysis ‘Assured’ Uncertainty: Why First Circuit’s Decision Related to Puerto Rico’s Insolvency May Shake Up the Municipal Bond Market Along with the decline in interest rates, this proved to be a massive hit to the industry’s fee structure. Are Municipal Bonds Exempt From State Taxes? With tens of billions of dollars at stake, the bare-knuckles brawl has also roiled the massive municipal bond market back on the mainland. The MSRB does not review transaction data submitted by submitters for accuracy, completeness or any other purpose, and does not warrant or guarantee the accuracy of any such transaction data and/or related information. The actual business of insuring municipal bonds came through the crisis without immediate losses, so Assured Guaranty gained market share and prospered. and FGIC. Puerto Rico board seeks to give bondholders 66%-69% haircut Under certain conditions the board could submit the proposal to the court without a further vote. In turn, insurers of the bonds—those that guarantee interest and principle against default—are going to be asked to share the pain. Track CUSIPs, learn about issuers and dive deep into every Puerto Rico municipal bond. It’s time to treat it and price it as such or face possible ruin. As a lifetime investor in postage stamps, I've. You shall bear all risk, related costs and liability and be responsible for your use of the Service. It has become a true insurance product. We see the extraordinary actions taken so far at the federal level by both the Federal Reserve Bank and the Federal Government. Please help us personalize your experience. Join other Financial Advisors receiving FREE personalized market updates and research. The presumption in such actions by the municipal bond issuer is ludicrous, but defensible with taxpayers. Creditors approve Puerto Rico’s General Development Bank debt deal. We are providing certain data supplied to us by the Municipal Securities Rulemaking Board ("the Service") without warranties or representations and on an "as-is" basis. This concept has been tried in the past with very limited success since it could not compete with the low fees and higher costs from the credit enhancement approach. Tom Kozlik on mounting municipal risk and whether credit downgrades are coming Mon, Nov 23rd 2020 Why investors are buying municipal bonds as defaults are on the rise As a … Real-time data on all CUSIPs, the latest muni bond news, the ins and outs of bond investing and track your municipal bond portfolio at the Premier site for Municpal bond investors. When the Puerto Rico bond market collapsed in 2013, many U.S. investors were shocked to learn that they owned a substantial portion of Puerto Rico bonds in their municipal bond funds. Coronavirus Coverage ... insuring municipal bonds came through the ... service payments thereby requiring the bond insurers to step up and pay. The Premier Pacific NW Leader Online for Muni, Tax-Free Puerto Rico Bonds Providing High Quality Fiduciary Services at Very Low Prices. And why not, they may even decide to renege on their uninsured debt as well. A decision this week by a U.S. Appeals Court in a lawsuit related to Puerto Rico's bankruptcy raises concerns over the payment of municipal bonds backed by specific revenues during future Chapter 9 cases, Fitch Ratings said on Thursday. This is because bond insurance had traditionally been structured to be of no cost to the issuer, i.e. MBI It was this segment of the business that brought down all the industry leaders. Will the Fed or Washington intercede, probably, but this is far from certain. The website was started in 1995 to increase the information transparency that is lacking in philately and to inform investors looking for safe-haven investments. A regulatory panel last year said Morgan Stanley must pay Puerto Rican bond investors $3.3 million . I have been reporting on municipal bond defaults for more than thirty years through 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 financial problems of states and municipalities have been growing for decades as unfunded obligations for pensions and health care have ballooned in anticipation of a crisis sometime in the future. The Service is reproduced by permission of the MSRB under a non-exclusive license. This of course was reflected in minuscule yield differentials. When Puerto Rico defaulted on its debt in 2016, it was the largest municipal default ever. The coronavirus has had a devastating effect on the short-term finances of every state and municipal entity dependent on sales and payroll taxes for the revenues. Such transaction data and/or related information may not exist for all municipal securities and may not be required to be submitted to the MSRB for certain types of municipal securities transactions. Puerto Rico policeman accused of theft while in uniform ABC News 18:16 17-Nov-20 Pandemic Déjà Vu Public Books 16:21 17-Nov-20 Puerto Rico Nutrition Benefit Cuts Risk Food Insecurity, Show Block Grant’s Limits Center on Budget and Policy Priorities 15:37 17-Nov-20 the fees were based of the savings in interest expense due to the bonds being rated AAA versus the issuers rating which were usually A- or BBB. All Rights Reserved, This is a BETA experience. Municipal, Tax-Free Bonds for Puerto Rico Providing High Quality Fiduciary Services at Very Low Prices. Thank you for your submission, we hope you enjoy your experience. Rather, it was due to its prudence in not plunging into the insuring of corporate and structured mortgage backed securities. Richard Lehmann blogs on Income Investing and Philately, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation BrandVoice. The crisis began in 2014 when three major credit agencies downgraded several bond issues by Puerto Rico to "junk status" after the government was unable to demonstrate that it would be able to pay its debt.