April 10 Several large hedge funds doubled down
on Puerto Rico in last month's giant bond sale despite the U.S.
territory's financial struggles, the Wall Street Journal
reported, citing confidential documents reviewed by the
Och-Ziff Capital Management, Paulson & Co, Fir Tree
Partners, Perry Capital LLC and Brigade Capital Management each
bought more than $100 million of the bonds, according to a list
of buyers of the sale, the newspaper said. (link.reuters.com/dej48v)
Puerto Rico last month sold $3.5 billion of junk-rated bonds
at a surprisingly low tax-free interest rate under 9 percent,
but investor demand outstripped supply despite the Caribbean
island's difficult cash position.
Bigger than an initially planned $3 billion, the sale was
oversubscribed, attracting orders worth more than $16 billion
from 270 different accounts, according to the island's Treasury.
It drew scores of hedge funds and other non-traditional buyers
eyeing fat yields and possible trading gains.
Hedge funds and other non-traditional buyers of municipal
bonds bought about 70 percent of the deal when it was offered,
according to calculations based on the document - an atypically
high level for municipal-bond offerings, the Journal said.
The list doesn't show whether the firms continue to hold the
bonds, which carried junk credit ratings, or whether they sold
some or all of their purchases afterward, the newspaper said.
(Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar