Hedge Funds See Windfall From Bets on Puerto Rico After Storm
- Debt swap provided seven times more than post-hurricane lows
- New sales-tax debt traded heavily Friday as some lock in gains
This article is for subscribers only.
In late 2017, while Puerto Rico was reeling from Hurricane Maria, the government’s bonds went into a free fall as Wall Street speculated that much of the bankrupt island’s debt would need to be forgiven, leaving some of it trading for pennies on the dollar.
But hedge funds including GoldenTree Asset Management, Tilden Park Capital Management and Taconic Capital Advisors started plowing hundreds of millions of dollars into the U.S. territory’s subordinate sales-tax-backed bonds -- a well-timed wager that’s delivering big gains.