Puerto Rico Bonds, MBIA Stock Jump on Restructuring Settlement

Link: https://www.wsj.com/articles/puerto-rico-bonds-mbia-stocks-jump-on-restructuring-settlement-11614179542

Excerpt:

A settlement between creditors in Puerto Rico’s bankruptcy case lifted prices of the commonwealth’s municipal bonds and shares of insurance companies that guaranteed payments on the bonds.

Traders have driven up prices of the island’s benchmark $3.5 billion general obligation bond due 2035 by 3.3% to around 78 cents on the dollar after the Tuesday deal removed one of the last logjams in Puerto Rico’s nearly four-year journey through bankruptcy court. Roughly $400 million face amount of the bond changed hands Tuesday and Wednesday, making it one of the most actively traded securities in the municipal-bond market, according to data from Electronic Municipal Market Access.

Shares of the insurers that guaranteed payments on billions of dollars of Puerto Rico’s defaulted bonds also rose as the settlement removed some uncertainty about the amount of claims they would need to pay. MBIA Inc.’s stock has jumped around 13% this week, while Ambac Financial Group Inc.’s shares have gained about 7.2%.

Author(s): Matt Wirz

Publication Date: 24 February 2021

Publication Site: Wall Street Journal

Joint motion filed in St. Clare’s pension case

Excerpt:

It’s been a little over two years since 1,100 former St. Clare’s health care workers learned they were no longer receiving their pensions.

The legal battle continues, after a lawsuit has been filed against the Albany Roman Catholic Diocese, the St. Clare’s Corporation, and two local bishops.

Attorney General, Letitia James, is also launching a separate investigation. But now, a joint motion has been filed between the lawyers working on behalf of the pensioners and the Attorney General’s Office to compel the defendants to produce documents and information.

Author(s): Jamie DeLine

Publication Date: 16 February 2021

Publication Site: ABC News 10

NY Hedge Fund Founder Admits To Fraud In Connection With Neiman Marcus Bankruptcy

Link: https://dailyvoice.com/new-york/northsalem/news/ny-hedge-fund-founder-admits-to-fraud-in-connection-with-neiman-marcus-bankruptcy/802716/

Excerpt:

A hedge fund founder admitted to bankruptcy fraud for abusing his position on a Neiman Marcus Group Inc. bankruptcy committee to purchase securities at a deflated price.

Nassau County resident Daniel Kamensky, of Roslyn, the founder of the New York-based hedge fund Marble Ridge Capital pleaded guilty to pressuring a rival bidder to abandon its higher bid for assets in connection with Neiman Marcus’s bankruptcy proceedings.

U.S. Attorney Audrey Strauss said that Kamensky was the principal of Marble Ridgewhich had assets under management of more than $1 billion that invested in securities in distressed situations, including bankruptcies. Prior to opening Marble Ridge, Kamensky worked for many years as a bankruptcy attorney at a well-known international law firm, and as a distressed debt investor at prominent financial institutions.

Author(s): Zak Failla

Publication Date: 7 February 2021

Publication Site: Daily Voice

Trucking Failures Surged Last Year Under Pandemic

Link: https://www.wsj.com/articles/trucking-failures-surged-last-year-under-pandemic-11612827527

Excerpt:

U.S. trucking-company failures nearly tripled in 2020 from the previous year as fallout from the pandemic deepened pressure on smaller operators while well-capitalized bigger truckers held on and found stronger financial footing as the economy reopened.

Some 3,140 fleets shut down last year, a 185% jump from 2019, according to transportation industry data firm Broughton Capital LLC. Roughly half of the 2020 failures came in the second quarter, when freight volumes plummeted amid widespread shutdowns aimed at limiting the spread of Covid-19.

Author(s): Jennifer Smith

Publication Date: 8 February 2021

Publication Site: Wall Street Journal

How Vulnerable Are Insurance Companies to a Downturn in the Municipal Bond Market?

Link: https://www.chicagofed.org/publications/chicago-fed-letter/2021/451

Excerpt:

The potential impact of Covid-19 on the municipal bond market

The coronavirus pandemic and the related economic slowdown are expected to cause a persistent drag on state and municipal tax revenues, which may apply pressure to the municipal bond market. Current estimates from the Brookings Institution suggest that, relative to 2019 tax receipts, state and local general revenues will decrease by $155 billion in 2020, $167 billion in 2021, and $145 billion in 2022—or by about 5.5%, 5.7%, and 4.7%, respectively.3 These estimated declines are in line with those experienced during the Great Recession of 2008–09, which averaged 5.8%.4 States face additional budgetary pressures from increased expenditures related to the pandemic, particularly from increased payouts of unemployment insurance (UI) benefits. Between March and October 2020, states paid a record $125.1 billion in UI benefits. The UI benefits paid thus far in 2020 are 30% more than the $96.3 billion in benefits states paid in all of 2009.5 However, states are better positioned to weather these budget stresses than they were prior to the Great Recession due to the increase in state revenue stabilization funds, commonly referred to as “rainy day funds.” At the start of 2020, the median state rainy day fund was equal to 7.8% of state general revenues, compared with 4.6% at the start of 2008.6 This should provide some cushion for the expected decline in revenues due to Covid-19.7 And the second Covid-19 stimulus package signed into law at the close of 2020 is expected to help stabilize state and local budgets and ease stress on municipal bond markets, although direct aid to states and municipalities was removed from the final bill. The bill does provide direct payments to individuals of up to $600, paycheck protection loans for businesses, extended federal UI benefits, $30 billion for vaccine distribution and testing, $54.3 billion for K–12 schools, $22.7 billion for higher education, and $45 billion for transportation-related relief spending. President Joe Biden is proposing $1.9 trillion in additional stimulus spending focused on vaccine distribution, aid to states, and direct benefits to individuals. However, this plan has yet to be enacted and is therefore subject to change. In summary, states and localities are likely to experience significant variation in Covid-19-related revenue declines, and their budgetary strength also varies. As such, certain muni bonds may face downgrades and default.

Authors: Andy Polacek , Shanthi Ramnath

Publication Date: February 2021

Publication Site: Chicago Fed

Puerto Rico bond negotiations slog toward seventh year

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202101251023SM______BNDBUYER_00000177-2bc5-dd67-a377-7bede5980001_110.1

Excerpt:

Negotiations on Puerto Rico?s central government and electric power authority debts have extended for several years, leaving participants with clashing views of the length of time they have taken and the lack of resolution of the island’s debts.

A Feb. 10 deadline looms for the Oversight Board to at least submit a bond deal resolution proposal and several participants expect progress in the coming year.

Since the signing of PROMESA, the Puerto Rico Oversight, Management, and Economic Stability Act, Puerto Rico has been hit or at least shaken by Hurricane Maria, political protests forcing the exit of Ricardo Rossell?, earthquakes, and the COVID-19 pandemic.

Author: Robert Slavin

Publication Date: 25 January 2021

Publication Site: Fidelity Fixed Income