Reuters reports that Senator Investment Group, Monarch Alternative Capital, and Stone Lion LP—all hedge funds—have gotten rid of hundreds of millions of dollars of Puerto Rico general obligation bonds in the wake of the devastation caused by Hurricane Maria. Similarly, another hedge fund, Varde Partners, no longer has $136M of its COFINA debt. Investors have been hoping that the island’s bonds would rebound after the territory filed for bankruptcy earlier this year. Now, however, recovery for Puerto Rico is expected to take longer after the storm. Debt prices have dropped to drastic lows, while Maria has caused tens of billions of dollars in damages.
Meantime, in the U.S. mainland and on the island, investors continue to fight to recoup their losses sustained when Puerto Rico’s bonds and closed-end bond funds plunged in value more than four years ago. Our securities fraud lawyers have been working with investors to get their funds back. Many investors were not properly apprised of the risks involved in investing in these bonds. Quite a number of them should never have invested in these securities at all.
Still, brokers from Banco Popular, UBS Puerto Rico, Santander Securities, and other brokerage firms continued to tout these investments as low risk and profitable. Some financial representatives even encouraged investors to borrow funds so that they could invest more, resulting in further devastating consequences.