Which Puerto Rico Bond Defaults Next? 46% Yields Provide a Clue Bloomberg lists the most recent trading prices of bonds that aren’t insured against default:
Puerto Rico defaulted for the first time on Aug. 3, when a little-known agency, the Public Finance Corp., paid investors just $628,000 of the $58 million they were owed.
The Finance Corp. is only one of the 17 arms of the U.S. territory that have sold tax-exempt bonds, according to the Government Development Bank. Unlike debt typically issued by countries, the securities carry varying degrees of risk because they’re backed by different sources of funds and legal safeguards.
So as the island burns through cash, there’s the obvious question: which bonds could be next?
By Insurer’s Calculation, Puerto Rico Debt Burden Is Lowest, but I’d listen to Moody’s,
Excluding the island’s utility bonds and adding the U.S. debt to each state based on their population, Puerto Rico has a lower debt-to-income ratio per capita than even Maryland or Virginia, which have top credit ratings, National [Public Finance Guarantee Corp.] said.
The analysis is in stark contrast with data from Moody’s Investors Service, which gives Puerto Rico the third-worst credit rating and says its net tax supported debt per capita is the highest among U.S. states and 11 times greater than Virginia’s. Moody’s projects recovery rates from 35 percent to 80 percent on commonwealth bonds.
VENZ/PDVSA: The Mixed Martial Arts of Bond Trading
To be clear, trading VENZ is to normal bond investing what mixed-martial-ats is to thumb-wrestling. It’s a crazy, high-risk world where a good day in the WTI oil market, or a couple of anodyne bureaucratic announcements, are enough in to set off a mad bull-rush, with venny traders tripping over one another to snap up paper.
For the rest of us, it’s all gambling. I could only find this scene dubbed in French – lay down your bets, ladies and gentlemen,
