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. 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. Puerto Rico’s bankruptcy, with $74 billion in debt at stake, is the largest municipal default in history. A regulatory panel last year said Morgan Stanley must pay Puerto Rican bond investors $3.3 million . The short-term effect, however, may well have very long-term implications for the finances of these entities. 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. Thank you for your submission, we hope you enjoy your experience. © 2020 Forbes Media LLC. Creditors approve Puerto Rico’s General Development Bank debt deal. The MSRB accepts no responsibility for the accuracy of the reproduction of the Service or that Service is current. Bondholders have yet to be heard from. Preliminary voting results were announced last week. 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. The Service is reproduced by permission of the MSRB under a non-exclusive license. The Investment Company Institute reported municipal bond funds saw $2.675 billion of inflows in the latest reporting week. By Robert Slavin 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 As a … ... Get the latest breaking news delivered straight to your inbox. 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… Welcome to MunicipalBonds.com. 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 … Your personalized experience is almost ready. For too long, bond insurance has been treated as a credit enhancement tool. In my view, the pandemic has accelerated that crisis point. Puerto Rico Municipal Bond News: I've published a number of catalogs and books on philately. 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! Opinions expressed by Forbes Contributors are their own. In turn, insurers of the bonds—those that guarantee interest and principle against default—are going to be asked to share the pain. Puerto Rico Municipal Bond Quotes, Rates, Yields, New Issues, Defaults and Ratings News. You may opt-out by. This of course was reflected in minuscule yield differentials. 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. This is because bond insurance had traditionally been structured to be of no cost to the issuer, i.e. Merrill is hardly the first firm to run into trouble with the collapse of Puerto Rico bonds. As a lifetime investor in postage stamps, I've. 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. The actual business of insuring municipal bonds came through the crisis without immediate losses, so Assured Guaranty gained market share and prospered. Puerto Rico … Municipal Bonds and Taxes: What Investors Need To Know. I'm a former Forbes columnist, investment advisor and publisher of the Forbes/Lehmann Distressed Municipal Debt Report. 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. 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. Find everything about Puerto Rico municipal bonds. Check your email and confirm your subscription to complete your personalized experience. 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. A second negative event for bond insurers since 2008 has been a redefining of just who is being insured. Creating a properly diversified portfolio can be a difficult proposition, especially when... Low Volatility ETFs invest in securities with low volatility characteristics. The Puerto Rican government-debt crisis is a financial crisis affecting the government of Puerto Rico. 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+. And why not, they may even decide to renege on their uninsured debt as well. But the industry shrunk dramatically and the seeds for future troubles soon became clear. Please help us personalize your experience. 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. 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