Difference between revisions of "Municipal Debt Research"

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Revision as of 14:20, 22 February 2018


New Orleans

Puerto Rico

Intercept - PR Debt Holder Unmasked Oct-2017

  • "The Baupost Group, a Boston-based hedge fund managed by billionaire Seth Klarman, owns nearly $1 billion of Puerto Rican debt, purchased under a shell company subsidiary and hidden from public scrutiny. Baupost acquired the debt through an on-paper Delaware-based corporation named Decagon Holdings LLC, whose beneficial owner had been unknown until now."

White House Dials Back Trump’s Vow to Clear Puerto Rico’s Debt - Oct-2017

  • "For more than a year, Puerto Rico has clashed with investors who hold slivers of its $73 billion debt, and who have pushed the United States territory to pay up."
  • "If Mr. Trump meant the federal government would work to help Puerto Rico have the debt forgiven, that could result in major losses for investors large and small. Still, it is far from clear whether the president or the federal government has the power to do that. And despite the reference to Goldman Sachs, Puerto Rico’s debt is held by a diverse universe of investors, including big hedge funds and middle-class Puerto Ricans who thought it would make a safe retirement nest egg."
  • "Most of Puerto Rico’s debt is in the form of municipal bonds, a type of debt governed primarily by state laws — or territorial laws, in Puerto Rico’s case — not by the federal government. Branches of the federal government, like the Internal Revenue Service, can step in under certain circumstances, but not simply to “wipe out” the debt."
  • As a territory, Puerto Rico was not eligible to take shelter in bankruptcy court, and without court protection its creditors began filing lawsuits seeking to enforce their claims.
  • Among other things, it used money from its workers’ pension system to pay for operations, leaving a $50 billion hole.
  • Congress enacted a special law, called Promesa, in June 2016 that put Puerto Rico’s finances under a federal oversight board and halted the creditors’ lawsuits. The new law also gave Puerto Rico certain bankruptcy-like powers, like the power to reduce debt unilaterally under the supervision of a federal judge.
  • "Even before the storm, the power authority had been operating under a federal court order for Clean Air Act violations and was reported to have cheated its ratepayers for many years. About $9 billion of Puerto Rico’s total debt was issued by the power authority."

Sonoma County, CA

PG&E power lines linked to Wine Country fires - Oct-2017

  • PG&E and other large utilities in California have a long history of being found responsible for major wildfires because of inadequate maintenance of their power lines.
  • In April, the state Public Utilities Commission fined PG&E $8.3 million for failing to maintain a power line that sparked the Butte Fire in Amador County in September 2015. That fire burned for 22 days, killing two people, destroying 549 homes and charring 70,868 acres.
  • CalFire announced last year that it will seek to force PG&E to pay $90 million in firefighting costs. More than 1,000 lawsuits and claims are still pending against the utility.
  • State Sen. Jerry Hill, D-Redwood City, said he sees similarities in PG&E’s problems with maintaining its power lines to the utility’s failures to properly maintain its natural gas lines that led to the 2010 San Bruno explosion that killed eight people and destroyed 38 homes. PG&E was fined $1.6 billion by the PUC, and a federal jury last year convicted the company on five charges of violating federal pipeline safety regulations and one charge of obstructing an official National Transportation Safety Board probe into the blast.