Detroit ‘Contagion’ Spreads; Widely-Held Puerto Rico Muni Bonds Collapse
“It’s getting concerning,” notes one fixed-income banker, Puerto Rico muni bond yields “never got near 10% [yields] even in the crisis.” Some of the 27-year maturity Puerto Rico bonds just traded at a dismal 67 cents on the dollar (10.082% yield) and the most recently issued 2036 Electric Power bonds have collapsed from par a month ago to just above 82 cents on the dollar today. As the WSJ reports, the fall in prices also is a sign of investor risk aversion in the wake of Detroit’s record municipal-bankruptcy filing in July; but it seems the anxiety and outflows from ETFs is having just as big an impact as Puerto Rico bonds now trade cheaper than Detroit’s. “It’s out of whack,” one analysts warns, though the island’s double-digit unemployment and recent weakness in economic indicators somewhat support the concerns – and while the “yields are attractive” it is possible that the island’s borrowing costs could go higher as supply is extremely heavy in coming months. With 77% of managers holding Puerto Rico bonds, this is a problem…
Puerto Rico Debt Prices Slump Anew
Yields on Longer-Dated Bonds Exceed 10%
Study: U.S. Could Default as Early as Oct. 18
Read more: http://swampland.time.com/2013/09/10/study-u-s-could-default-as-early-as-oct-18/#ixzz2eXVHqrrB
Jeff Gundlach Singles Out The Emerging Market Country Most Vulnerable To A Crisis
Jeff Gundlach of DoubleLine Funds just wrapped up his latest public webcast.
He reiterated his calls for interest rates and inflation to remain low. He also reiterated his worry about the longer risks of high Federal debts and deficits.
Gundlach spent quite a bit of time on the turmoil in the emerging markets, particularly India.
“I would not own the Indian stock market,” he said. “It looks very scary.”
Read more: http://www.businessinsider.com/jeff-gundlachs-sept-10-presentation-2013-9#ixzz2eXVWUeFU