Puerto Rico Luring Individuals as Trading Examined: Muni Credit

Puerto Rico’s record $3.5 billion debt sale was structured to keep out individual investors with less than $100,000 to spend. Those buyers have found a way in, lured by the biggest rally in high-yield municipal bonds in five years.

The U.S. territory sold the securities March 11, in the largest junk deal ever for the $3.7 trillion municipal market. The borrowing came the month after the island was cut to speculative grade, and gave officials enough cash to pay bills through June 2015 as they try to revive a shrinking economy. Most of the original purchasers were hedge funds, and first-day trading in the bonds exceeded $5 billion.