July 25 (Bloomberg) -- A group of hedge funds that formed this month in support of new legislation in Puerto Rico has added 14 members, according to a spokesman for the coalition.
The pool, now with 18 members, has more than $240 billion combined under management, Russ Grote, a Washington-based spokesman at Hamilton Place Strategies, said in an interview. The companies hold about $4.2 billion of Puerto Rico securities, Grote said. He declined to name the new members.
The original members -- Brigade Capital Management LLC, Fir Tree Partners, Monarch Alternative Capital LP and Perry Capital LLC -- all based in New York, said in a July 17 statement that their combined $60 billion of assets could provide a “substantial source of financing” for the U.S. territory.
Demand from hedge funds for Puerto Rico debt has helped the commonwealth raise cash as it struggles to boost its economy. The funds and distressed buyers bought most of the island’s $3.5 billion junk-rated general-obligation deal in March, the biggest ever in the municipal market.
The group “stands behind the efforts of the governor and the commonwealth to enact legislation to substantially eliminate budget deficits and address the financial and operational difficulties facing certain non-guaranteed public corporations,” according to the July 17 statement.
Lawmakers last month passed a law allowing certain public corporations to restructure their debt by asking bondholders to take a loss. It’s part of a move to safeguard Puerto Rico’s ability to repay its general obligations and direct debt. Bonds of Puerto Rico and its agencies are tax-exempt nationwide.
Of the commonwealth securities the hedge-fund group holds, the “high majority” are general obligations, sales-tax bonds, Public Buildings Authority debt and Government Development Bank debt, Grote said. Those securities are exempt from the new debt-restructuring bill.
Puerto Rico plans to sell notes by Sept. 30 to refinance short-term maturities and generate cash, according to the GDB, which handles the commonwealth’s debt sales.
Lawmakers are also working on a plan that would enable the Infrastructure Financing Authority to sell as much as $2.2 billion of bonds backed by petroleum-tax revenue to repay loans to the GDB.
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