CHICAGO--(BUSINESS WIRE)--Nuveen Investments, a leading global provider of investment services to individual investors and their financial advisors, today announced that John V. Miller testified yesterday before the United States House Committee on Natural Resources at a hearing on the Puerto Rico Oversight, Management, and Economic Stability Act.
Miller, Nuveen Asset Management’s Co-Head Fixed Income, was among six panelists testifying. Because of Nuveen Asset Management’s long history and expertise in the municipal bond market, Miller was invited to testify about the firm’s perspective on draft legislation to address Puerto Rico’s fiscal crisis. The full text of Miller’s oral testimony is available on Nuveen’s website at Nuveen Press Room.
Miller testified that he and his team believe the draft legislation “has the potential to create a framework under which an orderly, fair and transparent resolution can be achieved for bondholders, while also fostering the conditions necessary for economic growth in Puerto Rico.”
Miller highlighted a number of points that speak to concerns voiced by the broader municipal bond market:
- There exists a critical difference between a U.S. Territory, which is ultimately subject to the control of the U.S. Congress, versus a State which has sovereignty in its fiscal matters.
- If the proposed legislation were to become Law, this would be a Territory-specific law, and therefore not applicable to 98% of the municipal bonds in the marketplace as they are issued by entities on the mainland.
- There is no legal, budgetary or market-based reason to believe that this Territorial-specific legislation would set a precedent for even the most fiscally stressed states.
- Even the lowest rated state, Illinois, does not need and would not benefit from restructuring their bonded debt. While Illinois remains mired in political gridlock which clouds Nuveen Asset Management’s near-term outlook, the State still has the economic base and fiscal capacity to independently address its budget and pension challenges.
Commenting more broadly on the Puerto Rico situation as well as the draft proposal, Miller shared, “The municipal market defies broad-brush generalizations; it is a highly complex market that trades based upon analysis of individual issuers. Puerto Rico is a significant outlier relative to U.S. states and the market has already rejected the notion that states should pay higher borrowing costs for Puerto Rico’s debt crisis.
A strong federal oversight board to facilitate greater transparency and fiscal discipline will be critical to restoring market confidence and building a strong foundation for Puerto Rico’s future economic growth. We are encouraged to see the draft legislation requires a full accounting of Puerto Rico’s financial picture before starting a restructuring process.
Importantly, the current proposal does not pick winners and losers among Puerto Rico’s complex capital structure. Rather, it provides all creditors the opportunity and responsibility to participate in a consensual, negotiated solution to Puerto Rico’s onerous debt burden.
Legislation that exempts any particular class would serve as an inappropriate Congressional bail-out of specific classes of creditors. The current proposal wisely leaves restructuring outcomes to the negotiation process and the courts and frees the independent oversight authority to craft a comprehensive and long-term solution.”
To view the full session including Miller’s testimony before the House Committee, click on the following link: http://naturalresources.house.gov/calendar/eventsingle.aspx?EventID=400195.
About Nuveen Investments
Nuveen provides investment solutions designed to help secure the long-term goals of individual investors and the financial advisors who serve them. Through the expertise and capabilities of its high-caliber investment managers, the firm is committed to providing world-class consultative services and advice that align with client needs. Funds distributed by Nuveen Securities, LLC, a subsidiary of Nuveen Investments, Inc. Nuveen Investments is an operating division of TIAA Global Asset Management. In total, Nuveen Investments managed $225 billion as of December 31, 2015. For more information, please visit the Nuveen Investments website at www.nuveen.com.