Friday, March 24, 2023
Homemutual fundsUS mutual funds unload on Puerto Rico debt

US mutual funds unload on Puerto Rico debt

U.S. mutual funds with heavy exposure to Puerto Rico bonds have sold off some of the cash-strapped island's debt to meet investor redemption demands, taking heavy losses after a year-long slide in prices.

The sellers included some of Puerto Rico's most bullish U.S. mutual fund investors including OppenheimerFunds, a vocal supporter of the territory's recent financial improvements, according to analysts and public filings.

Funds with less exposure aren't likely to unload their Puerto Rico debt at fire sale prices, said Daniel Hanson, an analyst at Height Securities. They can afford to hold tight and ride out the storm.

(Read more: Puerto Rico downgrade took 'cojones': Bond pro)

Still, mutual funds have found willing buyers in more risk-prone hedge funds, such as Meehan Combs and Maglan Capital. Distressed debt funds run by Marathon Asset Management and Stone Lion Capital Partners also have shown interest in Puerto Rico's bonds, analysts said.


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