{"id":3101,"date":"2014-02-10T00:00:00","date_gmt":"2014-02-10T05:00:00","guid":{"rendered":"http:\/\/silverlaw.lawblogger.net\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/"},"modified":"2018-10-08T12:34:38","modified_gmt":"2018-10-08T16:34:38","slug":"what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status","status":"publish","type":"post","link":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/","title":{"rendered":"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status?"},"content":{"rendered":"<\/p>\n

The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is below the investment grade status given to most U.S. municipal bonds. The downgrade had been prognosticated by many brokerage firm research analysts, including UBS Financial Services (UBS) over the last several weeks. UBS Financial Services\u2019 recent report Municipal Brief: Puerto Rico Credit & Market Update<\/a> dated January 29, 2104, predicted downgrade and additional problems for Puerto Rico Municipal Bond Investors. The reported sentiments of UBS Wealth Management research analysts Thomas McLoughlin and Kristin Stephens are clear, \u201cThe probability of a downgrade of the Commonwealth\u2019s GO and related bond ratings by all three ratings agencies into the non-investment grade category by the end of the fiscal year (30 June 2014) is high. Given the myriad obstacles facing Puerto Rico, we believe that at least one rating agency will take such an action within the next 30 days.\u201d UBS research opinions were also consistent with recent moves by S&P Dow Jones Indices which oversees the methodology used for constructing the S&P National Municipal Bond Indices that are used by investors to track the performance of municipal bonds issued throughout the U.S.<\/p>\n

On December 20, 2013, S&P Dow Jones Indices announced the removal of U.S. territories, including Puerto Rico, from the S&P Municipal Bond \u201cinvestment grade indices.\u201d According to S&P Dow Indices, the removal of Puerto Rico municipal bonds as a component from the U.S. National Municipal Bond Market indices was due to dissimilarities between the \u201cperformance and characteristics\u201d between the U.S. territories, including Puerto Rico, and the universe of \u201cinvestment grade\u201d municipal bonds issued by states and municipalities throughout the country. These changes were originally to be made on a gradual basis through March 2014. On January 8, 2014, S&P Dow Jones Indices hastened the removal of U.S. territories, including Puerto Rico municipal bonds, from S&P National AMT-Free and S&P AMT-Free Municipal Series Indices which was now effective January 2014 month end<\/a>.<\/p>\n

The removal of Puerto Rico municipal bonds from the universe of \u201cinvestment grade\u201d municipal bonds could potentially result in increased sell orders from municipal bond portfolio managers driving prices lower. Selling pressure from municipal bond portfolios including large mutual funds that hold Puerto Rico municipal bonds could be required because of fund-imposed \u201cinvestment grade\u201d mandates or money manager negative sentiment about the Puerto Rican economy. UBS Puerto Rico Family of Funds, including UBS Puerto Rico Fixed Income Funds <\/a>and UBS Puerto Rico Investors Tax Free Funds<\/a>, that are leveraged 50% against an underlying portfolio of Puerto Rico municipal bonds which may soon face lower prices. The effects of leverage on further price declines could be disastrous for closed-end funds that are illiquid and non-traded.<\/p>\n

Continue reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is below the investment grade status given to most U.S. municipal bonds. The downgrade had been prognosticated by many brokerage firm research analysts, including UBS Financial Services (UBS) over the last several weeks. UBS […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[599,596,616,615,576],"tags":[570,131,571,572,290,557,553,558],"class_list":["post-3101","post","type-post","status-publish","format-standard","hentry","category-securities-arbitration","category-securities-concentration","category-ubs-bank-loans","category-ubs-puerto-rico-bond-funds","category-unsuitable-investment-advice","tag-credit-ratings-downgrade","tag-finra-arbitration-2","tag-moodys-downgrade","tag-sp-downgrade","tag-securities-arbitration","tag-ubs-bank-loans-2","tag-ubs-closed-end-bond-funds","tag-ubs-puerto-rico-bond-funds-2"],"yoast_head":"\nWhat Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status? — Securities Arbitration Lawyers Blog — February 10, 2014<\/title>\n<meta name=\"description\" content=\"The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is — February 10, 2014\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status? — Securities Arbitration Lawyers Blog — February 10, 2014\" \/>\n<meta name=\"twitter:description\" content=\"The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is — February 10, 2014\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Silver Law Group\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status? — Securities Arbitration Lawyers Blog — February 10, 2014","description":"The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is — February 10, 2014","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/","twitter_card":"summary_large_image","twitter_title":"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status? — Securities Arbitration Lawyers Blog — February 10, 2014","twitter_description":"The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is — February 10, 2014","twitter_misc":{"Written by":"Silver Law Group","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/","url":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/","name":"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status? — Securities Arbitration Lawyers Blog — February 10, 2014","isPartOf":{"@id":"https:\/\/www.silverlaw.com\/blog\/#website"},"datePublished":"2014-02-10T05:00:00+00:00","dateModified":"2018-10-08T16:34:38+00:00","author":{"@id":"https:\/\/www.silverlaw.com\/blog\/#\/schema\/person\/de64d999508b1ad10d608a99f0d2e752"},"description":"The Standard & Poor\u2019s and Moody\u2019s credit ratings agencies downgraded Puerto Rico\u2019s general obligation bonds to BB+ and Ba2, respectively, which is — February 10, 2014","breadcrumb":{"@id":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.silverlaw.com\/blog\/what-solutions-exist-for-puerto-rico-investors-in-puerto-rico-municipal-bonds-after-credit-rating-downgrades-for-general-obligation-bonds-to-junk-status\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.silverlaw.com\/blog\/"},{"@type":"ListItem","position":2,"name":"What Solutions Exist for Puerto Rico Investors in Puerto Rico Municipal Bonds After Credit Rating Downgrades For General Obligation Bonds to Junk Status?"}]},{"@type":"WebSite","@id":"https:\/\/www.silverlaw.com\/blog\/#website","url":"https:\/\/www.silverlaw.com\/blog\/","name":"Securities Arbitration Lawyers Blog","description":"Published by Securities Arbitration Lawyers \u2014 Silver Law Group","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.silverlaw.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.silverlaw.com\/blog\/#\/schema\/person\/de64d999508b1ad10d608a99f0d2e752","name":"Silver Law Group","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.silverlaw.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/9eb0a691642ae95c68ee1c45b5f50f35bae76a41f3d9f861c7bfd40c87661746?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/9eb0a691642ae95c68ee1c45b5f50f35bae76a41f3d9f861c7bfd40c87661746?s=96&d=mm&r=g","caption":"Silver Law Group"}}]}},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/posts\/3101","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/comments?post=3101"}],"version-history":[{"count":1,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/posts\/3101\/revisions"}],"predecessor-version":[{"id":6768,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/posts\/3101\/revisions\/6768"}],"wp:attachment":[{"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/media?parent=3101"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/categories?post=3101"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.silverlaw.com\/blog\/wp-json\/wp\/v2\/tags?post=3101"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}