Puerto Rico Munis SWOT Analysis

Puerto Rico Munis SWOT Analysis
Trading Volumes

Puerto Rico is expected to issue $2 – $3.5 billion in general obligation (GO) bonds later this month, the latest since a $2.7 billion offering in 2012, and with all the attention on the island’s credit rating over the last six months both traditional muni investors and new investors are expressing interest in the GO bonds.

“The Commonwealth of Puerto Rico’s fiscal problems have transfixed market participants, not only in the municipal world, but across the fixed income landscape and investors struggling with a low yield and a low supply environment face the quintessential risk vs. reward dilemma while evaluating Puerto Rico (PR) debt,” write Citi analysts Vikram Rai, Mikhail Foux, and George Friedlander, offering up a full SWOT analysis of the upcoming deal.

Puerto Rico’s Strengths and weaknesses

One of the main strengths of the upcoming GO issuance is that the current administration in Puerto Rico has made it clear that it takes external market concerns seriously. One example is the current GO offering itself, which is partially being held to assuage liquidity fears even though the island probably doesn’t need additional financing until 2015. Additionally, Puerto Rico has agreed to waive its sovereign immunity and give New York state courts jurisdiction over the bond issuance, showing a firm commitment to repaying its debts.The administration is also working to balance the territory’s budget by 2015, which most analysts believe it will manage to do if its pension reform efforts survive court challenges.

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Screenshot 27Bonhoeffer Fund's performance update for the month ended July 31, 2022. Q2 2022 hedge fund letters, conferences and mor