(Reuters) - Avenue Capital Group continues to buy municipal bonds from Puerto Rico, believing it would be difficult to lose money on the already distressed securities, its co-founder said on Tuesday.
“You’re able to buy that debt today at huge discounts when I think the news has already been priced in,” Marc Lasry said at the Reuters Global Investment Outlook Summit in New York.
Avenue, which manages about $13 billion and is best known for investing in relatively risky loans of troubled companies and governments, is one of many private investment firms and hedge funds attempting to make money on the debt of the economically troubled island.
Puerto Rico defaulted on part of its obligations in August and has been trying to bring creditors to the table to agree to reductions on their debt. Funds could make large profits or losses depending on the price at which they bought into the debt and the ultimate level at which deals are struck.
Lasry did not specify details on the muni bonds Avenue is buying.
As of October, the firm owned Government Development Bank bonds and was part of group of creditors whose restructuring talks with the government failed, according to people familiar with the situation at the time.
“It’s hard to get hurt now in Puerto Rico,” Lasry said. “It’s more of a timing risk. Could someone come in and play massive hardball? Yes, but that would sort of prolong the process. You can game-theory Puerto Rico.”
That game-theory includes understanding what options the government has and at what price creditors would cut a deal, Lasry said.
“The information is out there,” he said. “I think how it gets resolved — the negotiation and the process and the games that people play — I think I know all the different things they can do.”
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Reporting by Lawrence Delevingne; Additional reporting by Megan Davies; Editing by Lisa Von Ahn