Puerto Rico Yields Rise to Three-Week High After Revenue Slumps

Puerto Rico bond yields set a three-week high after the U.S. territory said revenue collections for July through April trailed projections.

Tax-exempt general obligations maturing in July 2035 traded with an average yield of 9.15 percent today, the highest since April 22, data compiled by Bloomberg show. The yield on the junk-rated securities is about 5.9 percentage points above benchmark municipal debt.

The jump in yields is “a direct correlation to the information that’s most recently come out,” said Dan Toboja, vice president of municipal-bond trading in Chicago at Ziegler Capital Markets.

The commonwealth, which lost its investment grades in February as officials struggled to revive the island’s economy, sold the bonds in March to help balance budgets. It was the biggest junk-rated offering in the history of the municipal market.

Puerto Rico has collected $7.26 billion in general-fund revenue for the fiscal year through June, or $356 million below budgeted estimates as corporate-tax receipts lagged behind forecasts, Treasury Secretary Melba Acosta said May 9.

Tax collections from businesses came in $427 million below projections as 53 percent of island companies requested more time to file and didn’t make payments while seeking an extension, Melba Acosta said.

Debt of Puerto Rico and its agencies lost about 0.1 percent yesterday, the first daily decline in three weeks, according to S&P Dow Jones Indices. Commonwealth securities have still earned 8.5 percent this year, beating all the U.S. states in the S&P index and surpassing the 5.4 percent gain in the broader municipal market.

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