How Much Money Does Puerto Rico Owe The Us
Financial firms are still fighting to get billions out of the bankrupt island as information technology tries to rebuild.
Always since Hurricane Maria and Irma devastated Puerto Rico, a looming question has been what will happen to the isle's $74.8 billion in debt, which had bedridden its economy even earlier the storms hit. Protesters in major U.S. cities on October three called for the U.Southward. government to forgive the debt. Market analysts say repayment is unrealistic now that the island has suffered an estimated $45 billion to $95 billion in hurricane damage.
"They owe a lot of money to your friends on Wall Street, and we're going to have to wipe that out," President Donald Trump said on Fox News after a quick stop in Puerto Rico. The post-obit day, the director of the White Firm upkeep function, Mick Mulvaney, reversed course, proverb: "I think what y'all heard the president say is that Puerto Rico is going to have to figure out a fashion to solve its debt problem."
A legal battle over that debt has been playing out in bankruptcy court since May, and none of the mutual funds, hedge funds Hedge funds Unlisted investment funds that exist for purposes of speculation and that seek high returns, make liberal use of derivatives, especially options, and often make use of leverage. The master hedge funds are contained of banks, although banks ofttimes accept their own hedge funds. Hedge funds come nether the category of shadow cyberbanking. , creditors and bond Bail A bond is a stake in a debt issued by a visitor or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the master. If the company is listed, the holder tin can also sell the bond on a stock-substitution. insurers fighting for their share Share A unit of measurement of ownership interest in a corporation or fiscal asset, representing one part of the full capital letter stock. Its owner (a shareholder) is entitled to receive an equal distribution of whatsoever profits distributed (a dividend) and to nourish shareholder meetings. has indicated they will relinquish their claims.
But who are these bondholders, exactly? Their identities have been largely a mystery: There'due south no complete public listing of their names or the amounts of debt they claim.
Public information admission in Puerto Rico is a struggle. Public officials often refuse to fulfill requests, and the Government Evolution Banking concern (GDB) of Puerto Rico has kept data about the island's bondholders shut to the vest. The GDB did not fifty-fifty fulfill a asking for the names from a governor-appointed auditing commission in June 2016.
The Centro de Periodismo Investigativo went to court in July 2015 to challenge the GDB'south claim that creditor information was confidential and private. After a lengthy appeal procedure, nosotros obtained the identities of 275 firms that purchased bonds in the Puerto Rican government's junk bond sale in 2014, the largest such sale in U.Due south. history. Many of these bonds, however, take since changed hands.
Over the past several months, after a review of courtroom filings, documents from financial firms, government bond issues, off the record interviews, press clippings, FINRA, Puerto Rico's Part of the Commissioner of Insurance, Open Secrets, LinkedIn and other social media sources, and U.S. Securities and Exchange Commission (SEC) filings, nosotros have put together the near up-to-date listing of the owners of Puerto Rico's debt, naming dozens of bondholders and providing dossiers on their backgrounds.
Overall, we take identified more than than 30 hedge and mutual funds, insurers and financial institutions that collectively merits billions of dollars in Puerto Rico'due south debt.
The popular narrative of Puerto Rico's debt holders is that they are "minor" individual bondholders—rookie investors who trusted their savings to financial firms. Simply our investigation reveals that some of the well-nigh aggressive players demanding debt repayment in Puerto Rico'southward defalcation court are so-called "vulture firms." These hedge funds specialize in high-chance "troubled assets" near default or bankruptcy and cater to millionaire and billionaire investors.
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- Puerto Rico experienced widespread damage including most of the electrical, gas and h2o grid every bit well as agriculture after Hurricane Maria, a category iv hurricane, passed through on September 29. (Photo by Joe Raedle/Getty Images)
Vultures Circle the Island
When Puerto Rico alleged a class of bankruptcy in May, it was the largest municipal bankruptcy debt in U.S. history. Puerto Rico's more than than $74.8 billion in debt and $49 billion in alimony system obligations surpasses Detroit, Mich.'southward $18 billion bankruptcy in 2013. Much of that debt is involvement Interest An corporeality paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the elapsing of the operation and the charge per unit that has been prepare. . According to a report by the ReFund America Project, the financial firms like Goldman Sachs and Citigroup that helped structure the bonds built in astronomically loftier interest rates Interest rates When A lends money to B, B repays the amount lent past A (the capital letter) as well every bit a supplementary sum known every bit interest, so that A has an interest in agreeing to this financial operation. The involvement is determined by the interest charge per unit, which may be high or low. To have a very unproblematic instance: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the commencement year he volition repay a 10th of the capital initially borrowed (x million dollars) plus 5% of the majuscule owed, i.e. 5 1000000 dollars, that is a total of 15 meg dollars. In the second year, he will over again repay 10% of the capital borrowed, simply the v% now only applies to the remaining 90 million dollars still due, i.e. iv.v million dollars, or a full of 14.5 million dollars. And so on, until the tenth twelvemonth when he will repay the last 10 meg dollars, plus 5% of that remaining 10 million dollars, i.e. 0.v million dollars, giving a total of ten.5 meg dollars. Over x years, the total amount repaid will come up to 127.5 million dollars. The repayment of the uppercase is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher… The nominal involvement charge per unit is the rate at which the loan is contracted. The real involvement rate is the nominal rate reduced by the rate of inflation.
To scrounge up that coin, Puerto Rico has been struggling through thrift measures approved last spring by a U.Southward.-appointed fiscal control lath, including school closures and utility bill hikes. In August the control lath proposed even more than draconian measures, such equally massive furloughs.
Then the hurricanes hit. Much of Puerto Rico still lacks admission to h2o, electricity and basic services. As of October xi, 5,037 people (and 82 pets) were living in shelters, l pct of banks were closed, 59 percent of state lines and 43 percent of cell towers were down, and 86 percent of the island lacked power. Moody'south estimates that rebuilding will cost between $45 billion and $95 billion.
The fiscal command board has released $1 billion for hurricane relief. Co-ordinate to Gov. Ricardo Rossello, only $2 billion is left in the Treasury Department's account. The government warns that it may run out of coin by the finish of the calendar month.
The bankruptcy proceedings take been postponed while the isle recovers from the hurricane. Only while most of the island has been offline, lawyers for the bondholders have not stopped digitally submitting motions in the bankruptcy case.
The financial firms have organized themselves into alliances to aid their quest to get paid. These alliances include the Common Fund Grouping, which claims $seven.1 billion in Puerto Rico's debt; the Ad Hoc Grouping, which claims $3.3 billion; the Cofina Senior Bondholders Coalition, which claims $three.one billion; ERS Secured Creditors, which claims roughly $1.4 billion; and the QTCB Noteholder Group, which claims more than than $600 1000000.
The alliances can afford to rent prestigious police firms, like Jones Day, to file motions in Puerto Rico's bankruptcy case on their behalf. And with the exception of the Mutual Fund Mutual fund Commonage investment fund in the Usa, equivalent to SICAV in France. See, investment funds.
Vulture fund Investment funds who purchase, on the secondary markets and at a significant discount, bonds in one case emitted by countries that are having repayment difficulties, from investors who adopt to cut their losses and take what price they can become in lodge to unload the run a risk from their books. The Vulture Funds so pursue the issuing land for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors. .
For instance, while the Cofina Senior Bondholders Coalition says it represents individual and retired bondholders, it is in fact controlled past vulture funds such as Canyon Partners, GoldenTree Nugget Nugget Something belonging to an individual or a business organisation that has value or the power to earn money (FT). The reverse of assets are liabilities, that is the function of the balance sail reflecting a company'south resources (the majuscule contributed past the partners, provisions for contingencies and charges, as well every bit the outstanding debts). Direction and Tilden Park Capital Management, which require its clients to invest a minimum of $1 million to $5 million. Of the more than than 30 known financial firms vying for Puerto Rico's debt repayments, at to the lowest degree 24 are vulture firms.
The Top 10 Vultures
Here are the top x vulture firms involved the bankruptcy case, listed in order of the corporeality of debt they've claimed in court We have compiled their names, addresses, and a fleck of history on their business organisation dealings.
#1 Autonomy Capital
Puerto Rican Debt Claimed in Court: $937,585,000
Headquarters: 90 Park Ave., 31st Flooring, New York, North.Y., 10016 and Floor ii, Conway House, Conway Street, St. Helier, Bailiwick of jersey
Office of an Alliance: Ad Hoc Group ($3.3 billion)
Type of Bond: General Obligation Bonds
Key People: Robert Gibbins, Derek Goodman
History: Autonomy Capital is an affiliate of Autonomy Americas, which is incorporated in the taxation haven Taxation haven A territory characterized past the post-obit five independent criteria:
(a) opacity (via bank secrecy or some other mechanism such every bit trusts);
(b) low taxes, sometimes as low as zero for non-residents;
(c) easy regulations permitting the creation of front end companies and no necessity for these companies to accept a existent activeness on the territory;
(d) lack of cooperation with the inland revenue, customs and/or judicial departments of other countries;
(due east) weak or not-existent financial regulation. Switzerland, the City of London and Luxembourg receive the bulk of the capital placed in taxation havens. Others exist, of class, such as the Cayman Islands, the Channel Islands, Hong Kong and other exotic locations. of the Channel Islands in the English Aqueduct and claims to manage more than than $four billion.
Autonomy'due south clients include insurance companies, foundations, public and individual pension systems, and high internet worth individuals. The minimum amount required to invest in Autonomy's funds is between $5 million and $10 million.
Autonomy Capital is one of two firms involved in an ongoing legal battle with the European Complimentary Trade Association Surveillance Authority, a European watchdog, over millions of dollars worth of avails locked behind Iceland'south upper-case letter controls. Iceland, ane of the just countries to aggressively regulate banks in the wake of the global financial crisis, instituted the controls after its biggest banks collapsed in 2008.
#2 Decagon Holdings / The Baupost Group
Puerto Rican Debt Claimed in Court: $912,479,194
Headquarters: 10 Saint James Avenue, Suite 1700, Boston, Mass., 02116 (Decagon is registered in Delaware)
Part of an Brotherhood: Cofina Senior Bondholders Coalition ($3.1 billion)
Type of Bond: Puerto Rican Sales Tax Revenue Bonds
Cardinal People: Seth Klarman
History: Decagon Holdings is a firm within the Cofina Senior Bondholders Coalition and owns at least 29 pct of this brotherhood's debt—as much as $912,479,194—split among 10 funds, according to court documents.
The newspaper trail on Decagon is circuitous. These funds were incorporated in Delaware in 2015 as limited liability companies. Decagon is non registered at the Securities and Exchange Committee (SEC), the financial industry's federal regulator, and it does not have a website.
In a document related to the Puerto Rico government's defalcation case, Decagon Holdings simply provided a general address, with no phone number: 800 Boylston Street, the location of the Prudential Belfry, Boston's 2nd tallest building, with 52 floors.
On October 3, David Dayen of The Intercept unmasked Decagon Holdings' real possessor: The Baupost Group, a hedge fund that managed roughly $31.5 billion in regulatory assets every bit of December 31, 2016.
#three Coulee Capital letter Advisors LLC
Puerto Rican Debt Claimed in Court: $624,871,695
Headquarters: 2000 Avenue of the Stars, 11th Floor, Los Angeles, Calif., 90067
Office of an Alliance: Cofina Senior Bondholders Coalition ($303,080,000) and QTCB Noteholders Grouping ($321,791,695)
Type of Bond: Cofina or Sales Revenue enhancement Senior Bonds and General Obligation Bonds (Issued past the Public Buildings Say-so)
Key People: Joshua S. Friedman, Mitchell R. Julis, John Plaga, Jonathan Matthew Kaplan, Dominique Mielle
History: Canyon Capital Advisors LLC was founded in 1990 by Joshua S. Friedman and Mitchell R. Julis, both of whom take been intimately involved in stressed and distressed markets since the early 1980'southward, co-ordinate to information from the SEC.
As of 2016, Canyon employed "over 200 investment professionals" and had offices in Los Angeles, New York, London, Shanghai and Tokyo. The house advertises itself as having "substantial feel with distressed financials, including liquidations and recapitalizations."
In 2014, Coulee was one of the hedge funds that jumped on Puerto Rico's junk bond emission, and requested $l million of those bonds. Information technology got $28 million.
#four Monarch Alternative Capital
Puerto Rican Debt Claimed in Court: $606,600,000
Headquarters: 535 Madison Ave., New York, N.Y., 10022 & 52 Conduit St., 6th Flooring, London, England W1S 2YX, U.Grand.
Office of an Alliance: Ad Hoc Grouping ($iii.iii billion)
Blazon of Bail: General Obligation Bonds
Key People: Michael Weinstock, Andrew Herenstein and Chris Santana
History: Monarch Culling Capital has a history of investing in coal power. In February 2017, it became the principal shareholder in Curvation Coal, the 2d largest supplier of coal to ability companies in the U.S. The hedge fund owns $190 meg (nearly 11 percent of the company). Arch Coal has been defendant past United Mine Workers of America of conspiring with Peabody Energy in a scheme to default on $1.three billion in retiree pension and healthcare obligations.
Monarch Alternative'due south team includes erstwhile members of JP Morgan and Rothschild & Co, Rock King of beasts Upper-case letter, GoldenTree Asset Management, Davidson Kempner and Och-Ziff Uppercase.
Founded in 2002 by Michael Weinstock, Andrew Herenstein and Chris Santana, former bankers at Lazard Frères & Co., as of June 30 Monarch managed approximately $4.vi billion and had 63 employees, including 20 investment managers in offices in New York and London.
In 2015, Monarch bought $30 meg in Four Seasons Wellness Care backdrop, the largest nursing home operator in United kingdom of great britain and northern ireland, which was carrying pregnant debt. In 2006, Monarch bought Oneida Limited, ane of the world's largest designers and sellers of stainless steel items, after that visitor went into Chapter eleven defalcation.
#5 GoldenTree Nugget Management
Puerto Rican Debt Claimed in Court: $587,253,141
Headquarters: 300 Park Ave., 21st Floor, New York, N.Y., 10022
Part of an Alliance: Cofina Senior Bondholders Coalition ($3.one billion)
Type of Bail: Puerto Rican Sales Tax Acquirement Bonds- Key People: Steve Shapiro
History: It is very common for vulture fund executives to exist former bankruptcy attorneys, as is the case with Steve Shapiro, the executive director of GoldenTree Asset Direction. He was a defalcation lawyer for Stroock & Stroock & Lavan, where he represented bondholder committees and reorganized companies in Affiliate eleven proceedings and out-of-court restructurings.
At the 2015 Milken Establish Global Conference (an annual gathering of billionaires and global finance ability players that cost $fifty,000 a head in 2017), Shapiro spoke on a panel titled "Trash or Treasure? Finding Value in Distressed-Debt." He said his house had its middle on General Motors' liquidation and found "parts of Puerto Rico…very interesting." He mentioned the Puerto Rico Electric Power Authority (PREPA), the government-endemic corporation that is the sole provider of electricity to the isle. PREPA was already mired in debt, leading to serious maintenance problems. When the hurricane hit, that degraded infrastructure was wiped out, causing 88.3 percent of people on the island to yet be without electricity as of October x, according to the U.S. Department of Free energy.
GoldenTree has not disclosed whether it currently owns PREPA bonds.
#half-dozen Aurelius Capital Management LP
Puerto Rican Debt Claimed in Courtroom: $473,417,000
Headquarters: 535 Madison Ave., 22nd Flooring, New York, N.Y., 10022
Role of an Alliance: Ad Hoc Group ($three.three billion)
Blazon of Bail: General Obligation Bonds, Puerto Rico Highways and Transportation Authorization Bonds
Key People: Marking Brodsky, Samuel Jed Rubin, Esq., Eleazer Klein, Esq., and Jason Kaplan, Esq.
History: Mark Brodsky, founder and manager of Aurelius Capital, is another quondam bankruptcy lawyer, who for 16 years worked in major police force firms in New York.
Much of that time, in the early 1990s, he served every bit an chaser and co-caput of the bankruptcy practice at Kramer, Levin, Naftalis & Frankel. (The house went on to correspond bondholders Franklin Mutual and Oppenheimer Funds in a successful challenge to Puerto Rico'due south 2015 Recovery Act, which would have immune the island's electric authorization (PREPA), sewer authority and transportation potency to restructure their ain debt.)
From 1996 to 2005, Brodsky was a partner in Elliott Management Corporation, a vulture fund owned past financial tycoon Paul Singer, who fought alongside Aurelius and other firms for the collection of Argentine debt.
Brodsky founded Aurelius in 2006 with $325 one thousand thousand in majuscule, of which more than than one-half came from pension funds Alimony Fund
Alimony Funds Alimony funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of 1 or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that accept part in the scheme. They manage very large amounts of money that are unremarkably invested on the stock markets or financial markets. and foundations. Aurelius Capital has $4.83 billion in funds under management and focuses on investing in high-risk debt.
Aurelius has successfully profited from debt restructurings more than than once. In Greece in 2012, in the midst of the European country'southward financial turmoil, the regime had to face what was described equally a "modest well-funded grouping of investors" who opposed a 75 pct haircut. Aurelius Majuscule was part of that group. In Brazil's Petrobras, Aurelius forced a $54 billion default equally a "precautionary measure." The house also attempted to upset a Tribune Co. defalcation plan in Chicago, Ill. that had been approved by most creditors; but in that effort, they failed.
#7 Tilden Park Investment Master Fund LP
Puerto Rican Debt Claimed in Court: $466,084,719
Headquarters: 452 Fifth Ave., 28th Floor, New York, Due north.Y., 10018
Office of an Alliance: Cofina Senior Bondholders Coalition ($3.1 billion)
Type of Bail: Puerto Rican Sales Tax Acquirement Bonds
Key People: Josh Birnbaum, Jeremy Primer, Sam Alcoff, Robert Rossitto
History: One of the biggest players—and biggest profiteers—in the U.S. financial crisis was Joshua Birnbaum, onetime managing director at Goldman Sachs and at present chief investment officer of Tilden Park Capital Management. During this fifteen years working at Goldman Sachs, he led transactions related to subprime mortgages that catalyzed the Swell Recession.
Subsequently the existent estate bubble collapsed, Birnbaum received 1 of the highest payments in Wall Street history, raking in $17 1000000 in bounty. In his 2007 operation cocky-evaluations Birnbaum discussed the "very profitable year" and "extraordinary profits" that came from shorting the mortgage Mortgage A loan fabricated against property collateral. In that location are two sorts of mortgages:
one) the most common grade where the property that the loan is used to purchase is used equally the collateral;
2) a broader use of belongings to guarantee any loan: it is sufficient that the borrower possesses and engages the holding as collateral. market that yr, according to the SEC.
Birnbaum left Goldman Sachs in 2008 after he wasn't named partner, raising much speculation. "The question is really, 'What'southward his encore?'" asked Geoff Bobroff, an nugget management consultant, in an interview with The Telegraph.
The answer was Tilden Park Uppercase Management, which Birnbaum cofounded with fellow Goldman strategist (and Morgan Stanley alum) Jeremy Primer. Tilden Park handles more $xvi billion in assets.
The law firm of Paul Weiss Rifkind Wharton & Garrison, which represents the Ad Hoc Group of General Obligation Bondholders in the Title III example, was in plough the legal amanuensis for several Tilden Park transactions, including i of $i,479,825,500 conducted in January.
#8 Fundamental Advisors LP
Puerto Rican Debt Claimed in Court: $432,140,000
Headquarters: 745 5th Ave., 25thursday Floor, New York, N.Y., 10151
Office of an Brotherhood: Advertizing Hoc Group ($3.iii billion)
Type of Bond: General Obligation Bonds, Puerto Rican Sales Tax Revenue Bonds
Central People: Laurence L. Gottlieb, Hector Negroni, Dana S. Fusaris, Justin Vinci, Robyn A. Huffman and Bruce Kayle
History: Fundamental Credit Opportunities (FCO), a division of Fundamental Advisors, focuses on loftier-risk investments in states and cities nether "financial pressure."
FCO CEO Héctor Negroni was ane of three executives of firms belongings Puerto Rican debt who attended a panel at Ravitch Fiscal Reporting Plan hosted by the Graduate School of Journalism at the City Academy of New York in June. Their presence was surprising, as the effect was geared toward to journalists covering country and local financial issues, and executives from financial firms tend to shy away from media.
During the panel, Negroni wore a vest with the FCO Advisors logo on top of his checkered shirt. Sitting in a back row of the room, he listened to the other lecturers, and when he did not agree, he raised his voice to speak sharply over the speaker. He argued that democracy of Puerto Rico "is completely solvent. There's no reason to be in default, no reason to be in defalcation." (Negroni also took advantage of an pause earlier the panel to have to the microphone and sing a song, Frank Sinatra-style.)
#9 Oaktree Capital Direction
Puerto Rican Debt Claimed in Court: $410,216,768
Headquarters: 333 S. M Ave., Los Angeles, Calif., 90071
Office of an Alliance: ERS Secured Creditors ($1.4 billion)
Type of Bond: Employee Retirement System Bonds
Key People: Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Rock
History: Oaktree Capital Management is an investment firm that manages $100 billion through various hedge funds. It has 900 employees and offices in 17 cities, including London, Dubai, Hong Kong, Tokyo and Sydney. Oaktree'due south clients include 75 of the 100 largest U.S. alimony plans and 50 primary retirement plans, more than 400 corporations effectually the earth and more than than 350 foundations.
Oaktree has major interests in infrastructure, real estate and free energy. Its energy holdings add up to $2 billion and information technology holds a "decision-making position" in more 15 companies in that sector.
In 2013, Oaktree Capital purchased 50 percent of Aerostar Airport Holdings, the operator of the Luis Munoz Marin International Airdrome San Juan. In May 2017, it sold its stake in Aerostar for $430 meg to Grupo Aeroportuario del Sureste and the Canada's Public Sector Pension Investment Board.
The house also purchased $25 million in Puerto Rico's 2014 General Obligations junk bond issue.
In Puerto Rico's bankruptcy case, Oaktree Majuscule claims $410,216,768 in Retirement System bonds through vii funds : Oaktree Funds Opportunities Fund Holdings LP, Oaktree Opportunities Fund Ix Delaware LP, Oaktree Opportunities Fund 9 (Parallel 2) LP, Opps Culebra Holdings LP, Oaktree Opportunities Fund X Holdings (Delaware) LP, Oaktree Opps X Holdo Ltd and Oaktree-Forrest Multi-Strategy, LLC.
#10 Stone Lion Uppercase
Estimate of Puerto Rican Debt Endemic: $325,377,000
Headquarters: New York, North.Y., U.S.
Part of an Alliance: Ad Hoc Grouping ($iii.3 billion)
Blazon of Bail: General Obligation Bonds, Puerto Rico Highways and Transportation Dominance Bonds
Key People: Gregory Augustine Hanley, Alan Jay Mintz, Danielle Schaefer Klyap, Claudia Lee Borg, Elan Daniels
History: Rock Panthera leo Capital was founded by Alan Jay Mintz and Gregory Augustine Hanley in 2008. These 2 men were in one case risky debt dealers at Comport Stearns, the depository financial institution that infected the fiscal market Financial market The market for long-term capital letter. Information technology comprises a primary marketplace, where new issues are sold, and a secondary market, where existing securities are traded. Aside from the regulated markets, there are over-the-counter markets which are not required to encounter minimum atmospheric condition. with toxic mortgage assets, received a bailout from the Federal Reserve FED FED – decentralized key banking concern : http://www.federalreserve.gov/
Federal Reserve Officially, Federal Reserve Organization, is the United States' cardinal bank created in 1913 by the 'Federal Reserve Act', also chosen the 'Owen-Glass Act', after a series of cyberbanking crises, particularly the 'Banking concern Panic' of 1907.
In 2014, they requested $100 meg from the Puerto Rico government's junk bail result and received $thirty one thousand thousand. However, the house is challenge, in total, more than than $300 1000000 in General Obligation bonds that may have been obtained before or after 2014. It besides owns more than $xv million in bonds from Puerto Rico Highways and Transportation Dominance.
Eric Michael Friel, senior managing manager of Stone Lion Capital, was among the executives who attended the Ravitch event in New York this year. He was formerly a managing managing director and "risky debt" analyst at Bear Stearns & Co., one of the start banks to collapse in 2008.
"Contrary to pop belief, I believe investors similar hedge funds want many of the same things that the people of Puerto Rico desire," he said at the Ravitch event, citing government transparency and Medicaid funding as examples. Noting that his father was a teacher, he added, "I understand the value of a good education, and that's the terminal thing we desire to run across taken abroad from the people of Puerto Rico."
However, the alliance of which Rock Lion is a fellow member, the Ad Hoc Group, launched an offensive confronting the Puerto Rican health and pedagogy systems with a report commissioned in 2015 mapping a debt repayment plan. The report, "For Puerto Rico, There is a Amend Way," recommended the dismissal of teachers, cuts in the subsidy granted to the University of Puerto Rico and trims to "excess Medicaid benefits," amidst other thrift measures.
At the Ravitch upshot, Friel spoke to press about the demand for more transparency from the fiscal control board and the government of Puerto Rico. When CPI asked Friel to disclose the price at which Stone Lion Capital purchased Puerto Rican junk bonds Junk Bonds The nickname in the USA for loftier-risk bonds, also called High Yield Bonds, issued by a company whose solvency is considered doubtful. This type of bond is considered highly speculative by the rating agencies. in 2014, he said, "I don't know the answer, and I recall that'southward the wrong matter to focus on. I think knowing that isn't going to solve any of Puerto Rico's problems. Literally. It's not going to help anyone with annihilation."
Note: 1 of the top ten debtholders, SV Capital, a fellow member of the ERS alliance that claims $389,851,034 in debt, is omitted from this listing because we could not determine whether information technology was a vulture firm. The company is a phantom—it was registered as an anonymous firm in Delaware on August 2016 and is not registered with the SEC.
The residual of the debt
This is necessarily an incomplete list. The alliances, although they are the loudest voices in the proceedings, represent only nearly 21 percent of the total debt.
Who are the missing players, and how much do they own? More transparency is urgently needed.
We volition continue to follow the bankruptcy filings and post more information as it comes to calorie-free.
Nosotros will also be reporting on another group of debtholders: mutual funds.
Although most of the alliances are dominated by vultures, one, the Mutual Fund Group, is made up exclusively of three common funds: Franklin Mutual Advisors, Oppenheimer Funds and Santander Asset Management. Another powerful vocalization in bankruptcy courtroom is the multinational investment firm UBS, which invested in mutual funds called Puerto Rico Family unit of Funds. UBS did not join an brotherhood, only has filed independent court briefs and claims $one.4 billion of the debt.
Common funds theoretically represent the interests of small-dollar investors, but many of those involved in Puerto Rico, including UBS and Oppenheimer, have a long trail of fraud claims and lawsuits filed past those investors. Nosotros'll dive into that next.
Laura Moscoso and Ethan Corey contributed research and fact-checking.
This reporting was supported by a grant from the Leonard C. Goodman Institute for Investigative Reporting and is role of a collaboration betwixt In These Times and Centro de Periodismo Investigativo.
Source: https://www.cadtm.org/Who-Owns-Puerto-Rico-s-Debt-Exactly-We-ve-Tracked-Down-10-of-the-Biggest
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