Fitch: Clarification Issued on Puerto Rican Investor Mix
NEW YORK--(BUSINESS WIRE)--On Aug. 13, 2014, Fitch Ratings published commentary and research titled 'Big Changes for Puerto Rico Bond Market (Shift to New Investors Creates Bifurcated Trades)'. The report has been updated to provide certain clarifications.
Specifically, Fitch has obtained additional information on the exposures held by certain investor segments and carried bond insurance. To reflect this, adjustments were made, where appropriate, to show the holdings of long dated Puerto Rico zero coupon bonds on the basis of current market values rather than par value and insured bonds on the basis of par amount as opposed to par and interest. The adjusted values are lower, in line with the long-dated maturity of the instruments, and are a more appropriate reflection of the true exposure and value at risk, in Fitch's opinion.
Using current market values for zero coupon bonds, where available, total open-end U.S. municipal mutual fund ownership was approximately $20 billion, or 30% of the $65.1 billion Puerto Rico bond market. Holdings by Oppenheimer and Franklin funds, were $7.1 billion and $4.6 billion, respectively, using market values for zero coupon bonds (together 18% of the market), down from a combined $23 billion or 35% when using final maturity par value.
Using net par value, the amount of Puerto Rico bonds that benefited from monoline bond insurance was $15.2 billion, or 23% of the $65.1 billion Puerto Rico bond market. This is down from $23 billion or 35% of the market when calculated using par and interest.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Big Changes for Puerto Rico Bond Market (Shift to New Investors Creates Bifurcated Trades) -- Amended