Puerto Rico bonds

L

lucky trader

Hi everyone,
I would like to buy some PR bonds hoping I can capture some upside. I understand that, in practice, bonds which are heavily invested by large institutional investors will have the highest recovery rate. Assuming that large institutions will invest among other in large issues of bond, I would like to go with GO (general obligation) bonds with the highest outstanding issue. But I got lost when screening IB bond universe. Some bonds have very little outstanding amount, 1-2mln$. So I am assuming that if outstanding amount is so low it must be that large investors have bought these issues and little left in the market and these are the safest issue to invest. Am I wrong here to assume that bonds with the least outstanding are the ones which had large original issue? Thank you for help.
 
What about Venezuela? You can buy their bonds at a major discount but they should pay them off eventually. I know they have defaulted on their bonds before, but this is a different era and I don't think the international community would accept that now.

They have the largest oil reserves in the world. There is a good reason to go after their assets if Maduro failed to pay his debts. It's not unreasonable to think that there would be a 'regime change' if they defaulted and the next 'president for life' would be more agreeable.
 
DallasCowboysFan said:
What about Venezuela? You can buy their bonds at a major discount but they should pay them off eventually. I know they have defaulted on their bonds before, but this is a different era and I don't think the international community would accept that now.

They have the largest oil reserves in the world. There is a good reason to go after their assets if Maduro failed to pay his debts. It's not unreasonable to think that there would be a 'regime change' if they defaulted and the next 'president for life' would be more agreeable.
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agree.
are the bonds bought by Goldman publicly traded in the US?
 
zdreg said:
agree.
are the bonds bought by Goldman publicly traded in the US?
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I am sure they are or at least they could be. But it's my impression that they are being held until they rise to 50 or 75 cents on the dollar.

It would be interesting to learn what percentage of outstanding bonds, sold by the Venezuelan govt are held my Americans, Canadians, British etc...
I think that the greater percentage held by the West would increase the chances of influencing Venezuela to honor their debts. Because if they reneged on their obligations, the West would not forgive them and their would be other negative consequences.

Anyhow, there certainly is a healthy return on your investment.... you can't get 49% on your savings account.

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https://www.investing.com/rates-bonds/venezuela-government-bonds
 
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A risk that should be checked out first. The Puerto Rican constitution. There are rumors that some bonds may have been illegally issued and possibly no legal obligation to pay on them. I don't know details but this is a matter of current concern and discussion in Puerto Rico. :strong: I would check this out thoroughly before jumping in. Puerto Rico is bankrupt. I am assuming the U.S. will have little choice but to step in with cash. The control board isn't going to be able to affect a miracle. Major intervention will be needed. With any other admin i would have said chances of U.S. just cutting them loose and letting the Island sink on its own was zero, but with Trump admin almost anything could happen including advertising the Island for sale in WSJ.:D
 
piezoe said:
A risk that should be checked out first. The Puerto Rican constitution. There are rumors that some bonds may have been illegally issued and possibly no legal obligation to pay on them. I don't know details but this is a matter of current concern and discussion in Puerto Rico. :strong: I would check this out thoroughly before jumping in. Puerto Rico is bankrupt. I am assuming the U.S. will have little choice but to step in with cash. The control board isn't going to be able to affect a miracle. Major intervention will be needed. With any other admin i would have said chances of U.S. just cutting them loose and letting the Island sink on its own was zero, but with Trump admin almost anything could happen including advertising the Island for sale in WSJ.:D
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Instead of bonds... smart (big)money would be looking to buy large plots of distressed real-estate down there. Lots of hills that, while not ocean-front per-se... have incredible views of the ocean. The locals down there are not big fans of waspy mainland types however. But time will march on. Beautiful place.
 
vanzandt said:
Instead of bonds... smart (big)money would be looking to buy large plots of distressed real-estate down there. Lots of hills that, while not ocean-front per-se... have incredible views of the ocean. The locals down there are not big fans of waspy mainland types however. But time will march on. Beautiful place.
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It would be worth a lot more if it was the 51st state.
If they had statehood, real estate developers and investors would outnumber the residents.
 
vanzandt said:
Instead of bonds... smart (big)money would be looking to buy large plots of distressed real-estate down there. Lots of hills that, while not ocean-front per-se... have incredible views of the ocean. The locals down there are not big fans of waspy mainland types however. But time will march on. Beautiful place.
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If you have a twenty year or more time line, I think that's a good idea. But remember real estate prices are very sticky, That is also true in Puerto Rico where there is essentially no property tax, so owners can afford to sit on real estate. Bottom line, use due diligence.
 
DallasCowboysFan said:
It would be worth a lot more if it was the 51st state.
If they had statehood, real estate developers and investors would outnumber the residents.
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Think of the most corrupt place you can with the most inefficient government possible and the highest crime and poverty rates. Then ask yourself as a U.S. taxpayer do you want to take on another State that's even worse than Mississippi. Yes, it is a beautiful Island with great potential. But?
 
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