Puerto Rico specialist Cate Long explains the basics of its bankruptcy.
She helps me understand why it has been moving slow and why that could be different going forward.
She also addresses how hedge funds and bond insurers are trying to get different outcomes.
The bonds seem to be relatively attractive within the space but it's hard to assess the situation because of the unique situation.
Cate Long has a background in finance with ING Barings, ABN Amro and others. She's been a long-time columnist for Reuters and predicted the future insolvency of Puerto Rico in 2012 when that wasn’t on anyone’s radar. Now she runs Puerto Rico Clearinghouse an advisory for PR bondholders.
Puerto Rico's bankruptcy is a tragic case but also an interesting special situation. Cate helps me to understand the basics of what's going on.
She's extremely knowledgeable about the muni space overall and does think some of the PR bonds are relatively attractive, although there are significant differences between the myriad types of bonds.
She explains the territory falls under a unique kind of bankruptcy law, what the PR oversight board is and what it means after key officials were recently replaced. This could bring a resolution much closer.
She also weighs in on the lawsuits that are brought by bond insurer MBIA (NYSE:MBI) against hedge funds pursuing different objectives in the proceedings. The other bond insurers like Ambac Financial Group (NYSE:AMBC) and Assured Guaranty (AGO) also are involved in Puerto Rico's debt, the latter a short target of David Einhorn. To my knowledge Ambac has the least exposure among them.
Cate is extremely knowledgeable about the muni space overall and does think some of the PR bonds are relatively attractive. A great interview where I learned a lot about this unusual bankruptcy.
Puerto Rico Clearinghouse Puerto Rico Clearing
Bram de Haas writes the Special Situation Report. He looks at special situations like spin-offs, share repurchases, rights offerings and a lot of M&A events. If you are in a good mood follow him on Twitter here or reach out through email at dehaas.bram@gmail.com.
Disclosure: I am/we are long AMBC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I happen to have a small long position in AMBC but for a reason related to its litigation outside of PR.
