...Stern estimates that special revenue bonds now make up around a third of the $3.8 trillion municipal bond market in the US.
...Puerto Rico’s bankruptcy has raised questions about whether special revenue bonds are really as safe as investors thought.
...2016, and after Puerto Rico defaulted on its general obligation bonds, those bondholders sued to grab a share of the sales tax revenues. They claimed the money was rightfully theirs, since the Puerto Rican Constitution says that general obligation bonds must be paid first with “all available” resources.
... COFINA bondholders also agreed to give back $456 million in annual sales tax revenues to the government (nearly half of the yearly revenues that had initially been pledged), which can use the funds to pay the general obligation bondholders, among others. That was key to convincing the hedge funds gunning for the COFINAs to drop their lawsuit, and what has left investors questioning how safe other such structures will prove to be.
...backed by tolls collected by Puerto Rico’s Highways and Transportation Authority (HTA), has also raised big questions for investors.
Swain held that the HTA, which has $4.3 billion in outstanding debt, doesn’t have to make payments to its bondholders during the island’s bankruptcy.
...Swain’s decision is under appeal. Long, like many analysts, believe she got it wrong, and the dispute will likely be litigated all the way to the Supreme Court.
No comments:
Post a Comment