PUERTO RICO: “Franklin Resources Inc., one of Puerto Rico’s largest creditors, sold hundreds of millions of dollars of the island’s bonds in recent days, part of an exodus of investors hurt by accelerating losses in the wake of recent hurricanes.
A swath of mutual funds and hedge funds who held on to Puerto Rico’s roughly $70 billion of bonds even after the island started bankruptcy proceedings last year are now throwing in the towel. That includes Franklin Mutual Advisers LLC, a Short Hills, New Jersey-based unit of Franklin Resources, which has sold its entire $294 million stake in Puerto Rico general obligation bonds, people familiar with the matter said.
Bonds with a total face value of $8.24 billion have changed hands from the beginning of the month through October 23, more than in any other full month since the beginning of 2015, according to Municipal Securities Rulemaking Board data. The only time trading approached that amount was July 2015, after Puerto Rico’s then-governor said the island’s debts were ‘not payable.’
Puerto Rico bonds have since 2014 attracted a variety of distressed debt investors, especially hedge funds, because of their relatively cheap prices in otherwise red-hot debt markets. Some of those funds are now selling. Varde Funds and Merced Capital recently sold their holdings of $172 million of municipal bonds backed by Puerto Rico’s tax collections to other existing bondholders, according to bankruptcy court documents and a person familiar with the matter.”
-Matt Wirz, Andrew Scurria, and Heather Gillers, “Bond Funds Dump Puerto Rico,” The Wall Street Journal online, Oct. 25, 2017 07:03am