If anyone in the U.S. knows the market for defaulted Cuban debt, it’s Leo Guzman. The walls of Guzman & Co., his Coral Gables (Fla.)-based brokerage firm, are covered with framed copies of the island’s defaulted sovereign and municipal bonds, as well as bond and stock certificates from Cuban railroads and sugar mills. He followed the country’s bond market for three decades, buying and selling a bit along the way, until trading was outlawed by legislation strengthening the U.S. embargo in 1996. So pay attention when he says it’s premature for investors to be interested in snapping up the debt for pennies on the dollar.
While President Obama restored U.S. diplomatic relations with Cuba in December, the 18-year-old statute that prevents U.S. citizens from investing in Cuban assets remains intact. And because the ban can be lifted only by Congress—currently controlled by the Republicans—Guzman doesn’t see the market opening up. “Investing could be a complicated issue,” says Guzman, 68, who came to the U.S. from Cuba in 1961, two years after Fidel Castro swept to power. “The move by Obama is largely symbolic. I would think that his chances of getting congressional approval are low and certainly not immediate.”