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Puerto Rico's Biggest Hedge-Fund Coalition Said to Disband

  • Members owned $5.2 billion of Puerto Rico securities
  • Hedge funds had wanted to fund new debt to bridge deficit
Updated on

A group of hedge funds holding $5.2 billion of Puerto Rico debt disbanded as creditors prepare for talks to restructure the island’s obligations in smaller alliances, said two people with knowledge of the matter.

The group, which counted more than three dozen firms as members, had begun losing support as some broke off to form more nimble coalitions, said the people, who asked not to be named because the information isn’t public. The defections started after Governor Alejandro Garcia Padilla said in June that the government’s debts were “not payable” and it became clear officials would seek to restructure rather than borrow.