NEW YORK Feb 5 Puerto Rico bond prices were
mixed on Wednesday, with some issues slumping and others perking
up from lows touched after Standard & Poor's knocked the
Caribbean island's overall credit rating into junk-bond
A 2025 Puerto Rico public improvement bond with a 5.25
percent coupon traded in light volume on Wednesday between 63
and 64 cents on the dollar after selling a week earlier at 70.5
cents, according to Municipal Market Data. Its yield on
Wednesday was just over 11 percent tax free.
The issue traded even lower on Tuesday at about 56 cents on
the dollar after news of S&P's downgrade. Other Wall Street
credit agencies are also considering cuts in ratings to
non-investment grade for Puerto Rico, which carries $70 billion
in debt and is battling population loss and chronic recession.
A 2041 public improvement issue with a 5 percent coupon
traded on Wednesday at 65 cents on the dollar, up from a low on
Tuesday of 62.5 cents. Its tax-free yield on Wednesday was 8.24
percent, or 443 basis points over a comparable Treasury and down
from a 480 basis point spread on Tuesday.
"It appears that the market feels that the short-term risk
... is much greater than that for the commonwealth's long-term
debt," MMD analyst Dan Berger said in a pre-market commentary.
Bonds issued by the island's Sales Tax Financing Corp, whose
A-plus rating was left intact by S&P's analysts, were little
changed in Wednesday's trading.
"Puerto Rico trading yields already reflect below investment
grade ratings, so we do not expect precipitous price declines,
although some value erosion is likely," Janney Capital analyst
Alan Schankel said in a commentary.