Sunday, June 9, 2013

Reuters on Puerto Rico

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Sunday June 9th, 2013 at 10:49 AM

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A Shelter From Puerto Rico's Storm - WSJ

A Shelter From Puerto Rico's Storm
Sunday June 9th, 2013 at 10:43 AM

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By KELLY NOLAN And MIKE CHERNEY

The perilous state of Puerto Rico's finances has sowed fears among some municipal-bond investors. But not when it comes to bonds backed by taxes on the sales of bikinis. Or tobacco. Or most other goods sold on the island.
The investors taking the plunge said this type of debt issued by the Puerto Rico Sales Tax Financing Corp., known by its Spanish acronym of Cofina, CFN.LB 0.00% is safer than other debt issued by the financially troubled island but still offers an attractive return. Their reasoning: The government isn't allowed to tap the agency's kitty of sales taxes to pay other obligations. Taxes are collected and allocated to pay sales-tax bondholders' principal and interest before the island's general fund is allotted its share.
MLB Photos/Getty Images
The island's sales-tax bonds offer investors higher rates than similarly rated debt. Above, jerseys on sale during the first round of the World Baseball Classic in San Juan, Puerto Rico, last month.
"It's the only credit on the island the Puerto Rico government doesn't have its claws in," said Alex Grant, portfolio manager at RS Investments, who oversees about $750 million of municipal investments and owns Puerto Rico sales-tax bonds even after getting out of some other of the island's debt this year.
Investors have been nervous about Puerto Rico's fiscal health because it has a 14.5% unemployment rate, an expanding budget deficit, and its main pension fund is only about 7% funded. All three major ratings firms have recently downgraded the commonwealth's general obligation debt to the lowest investment-grade rating, just above "junk" level.
Fluctuations in the value of Puerto Rico's debt can cause broad ripples in the U.S. municipal-bond market, as they are widely held by investors hungry for their tax benefits.
The island's $70 billion in outstanding bonds, including those sold by Cofina, are generally exempt from state, federal and local taxes.
The sales-tax bonds have midlevel investment-grade ratings. They offer investors higher rates than similarly rated debt because of their association with Puerto Rico's troubles.
A Puerto Rico sales-tax bond maturing in 28 years offered a yield of 5.03% in late March, according to Barclays, BARC.LN +1.48% while a similarly rated bond on Thomson Reuters Municipal Market Data's municipal-bond benchmark yielded 3.76%. Puerto Rico's general obligation bond yielded 5.73%, while a similarly rated bond yielded 4.37%, according to the Municipal Market Data benchmark.
There are about $16 billion of sales-tax bonds trading in the markets, comprising just over one-fifth of the island's total outstanding debt, according to Puerto Rico's Government Development Bank, the island's finance arm.
After starting off the year on a hot streak, the commonwealth's bond prices declined in March in the wake of downgrades from Standard & Poor's Ratings Services and Fitch Ratings.
At the start of January, if investors bought a Puerto Rico bond maturing in 2041, they would be rewarded with a return of 5.42% that month. If they held it to the end of the quarter, they would be stuck with a loss on their investment of 0.75%, according to Barclays. In contrast, sales-tax bonds with a similar maturity returned 3.66% in January and 0.85% through the end of March.
Kathleen McNamara, municipal-bond strategist at UBS UBSN.VX +3.42% Wealth Management, said the sales-tax bonds have "exhibited the most resiliency" of Puerto Rico's debt.
Still, there are reasons to be cautious about the sales-tax debt.
Puerto Rico's economic growth has stalled, which could constrain the amount of sales-tax revenue it collects. Prices on the sales-tax bonds could also be volatile, especially if there are more downgrades of other Puerto Rico bonds.
Also, the island collects only about 60% of the taxes it could, according to Barclays. Puerto Rican officials have stepped up their enforcement on sales-tax collection, and they are looking for ways to broaden what they tax, the firm said.
Puerto Rico officials didn't respond to requests for comment about the island's tax-collection practices.
Write to Kelly Nolan at kelly.nolan@dowjones.com and Mike Cherney at mike.cherney@dowjones.com
A version of this article appeared April 4, 2013, on page C4 in the U.S. edition of The Wall Street Journal, with the headline: Shelter From Puerto Rico's Storm.
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Analysis: Puerto Rico faces uphill budget rush as 'junk' rating looms - Reuters

Analysis: Puerto Rico faces uphill budget rush as 'junk' rating looms
Sunday June 9th, 2013 at 9:53 AM

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By Michael Connor
Sun Jun 9, 2013 8:04am EDT
(Reuters) - Puerto Rico policymakers, desperate to keep the Caribbean island's massive debts out of the junk-bonds bin, are racing against a June 30 deadline to revive sales-tax hikes that are the backbone of the planned budget.
With over $70 billion of general obligation, agency and other debts, Puerto Rico pays the highest interest rates of any big tax-free borrower and has since December been downgraded by the big three U.S. ratings agency to near junk-bond status.
"They have to June 30, but something substantial has to happen, either the governor's plan or a legislative alternative, or there will be hell to pay," said Richard Larkin, director of credit analysis at HJ Sims & Co Inc.
Loss of investment-grade ratings for Puerto Rico's muni debt, which mainland investors like because its interest payments avoid nearly all income taxes, could prompt heavy selling by mutual funds and other institutional investors, analysts have said.
In office since January, Governor Alejandro Garcia Padilla won grudging admiration from Wall Street for pushing through hard-edged pension reforms but now faces a deadline only weeks away to pass a budget reliant on some borrowing and new tax revenues.
The U.S. commonwealth, which also has $35 billion in unfunded pension obligations, has not had a fully funded operating budget free of borrowing in more than a decade.
A key part of the $9.835 billion budget for the coming fiscal year - an expansion to businesstransactions of a sales-and-use tax that would add $1.1 billion to government revenue starting July 1 - was met with protests by business leaders and local politicians.
"If the final package produces significantly less revenue, budget balance will be elusive, and ratingdowngrades may follow," said Janney Capital Markets Managing Director Alan Schankel.
Alternatives to the sale and use tax include increasing taxes on gross receipts at businesses, instituting a 2 percent excise tax on imports and lifting corporate tax rates.
But top administration officials are pushing back, with Treasury Secretary Melba Acosta twice meeting with Senate President Eduardo Bhatia and House Speaker Jaime Perello. Another meeting has been set for this week.
Acosta told reporters following a meeting on Tuesday that there will be changes to the governor's original proposal to dramatically expand the sales tax. Garcia Padilla now agrees with exempting small and medium businesses, she said.
The Treasury chief said that all the alternatives were being analyzed to determine revenue estimates for each, and that a decision on final options would be taken during this week's meeting.
Sergio Marxuach, policy director at the Center for the New Economy, an independent think tank in Puerto Rico, said the $1.1 billion estimate of the administration's original sales-tax plan was "very aggressive."
"I don't believe Puerto Rico should be downgraded, but my gut tells me it will be," said Larkin. "The ratings agencies were concerned that the deficit was not erased by FY 2013, and now it will be extended to 2015. This budget does not make the case to maintain current bond ratings."
(Additional reporting by a Reuters correspondent in San Juan; Editing by Tiziana Barghini and Kenneth Barry)
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Puerto Rican Flags Wave To New York's Parade-Goers - KUHF-FM
Sunday June 9th, 2013 at 9:05 AM

Puerto Rican Community In Usa - Google News
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Puerto Rican Flags Wave To New York's Parade-Goers
KUHF-FM
In terms of Puerto Rican Day parades, New York City's event still takes the cake with its millions of parade watchers. Despite a steady population drop, the city is still home to the largest Puerto Rican community in the United States — and you'll ...

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Analysis: Puerto Rico faces uphill budget rush as 'junk' rating looms - Reuters
Sunday June 9th, 2013 at 9:05 AM

Puerto Rico News - Google News
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Analysis: Puerto Rico faces uphill budget rush as 'junk' rating looms
Reuters
By Michael Connor. Sun Jun 9, 2013 8:04am EDT. (Reuters) - Puerto Rico policymakers, desperate to keep the Caribbean island's massive debts out of the junk-bonds bin, are racing against a June 30 deadline to revive sales-tax hikes that are the backbone ...
Analysis - Puerto Rico faces uphill budget rush as 'junk' rating loomsReuters UK

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World’s Highest-Paid Hispanic Athletes
Sunday June 9th, 2013 at 9:02 AM

Latino Daily News
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World’s Highest-Paid Hispanic Athletes

Forbes recently ranked the highest-paid athletes in the world.  The top spot went to American golfer Tiger Woods, who earned a staggering $78.1 Million through winnings and endorsements. Seventeen athletes of Hispanic descent were ranked among the 100 highest-paid athletes. Check out the highest-paid Hispanic athletes below. 88. Alfonso Soriano - $18.1 Million Dominican baseball player who plays for the Chicago Cubs 85. Carlos Tevez - $18.2 Million Argentine soccer player who plays for Manchester City 72. Fernando Torres - $20 Million Portuguese soccer player who plays for Chelsea FC 63. Sergio Guero - $20.9 Million Argentine soccer player who plays for Manchester City 59. Adrian Gonzalez - $21.1 Million American baseball player of Mexican descent who plays for the Los Angeles Dodgers 57. Pau Gasol - $21.5 Million Spanish basketball player who plays for the Los Angeles Lakers 56. Gilbert Arenas - $21.6 Million American basketball player of Cuban descent who plays for the Shanghai Sharks 46. Miguel Cabrera - $23 Million Venezuelan baseball player who plays for the Detroit Tigers 37. Felix Hernandez - $25.3 Million Venezuelan baseball player who plays for the Seattle Mariners 34. Johan Santana - $25.5 Million Venezuelan baseball player who plays for the New York Mets 30. Rafael Nadal - $26.4 Million Spanish tennis player 25. Carmelo Anthony - $28 Million American basketball player of Puerto Rican descent who plays for the New York Knicks 24. Tony Romo - $28.8 Million American football player of Mexican descent who plays for the Dallas Cowboys 19. Fernando Alonso - $30 Million Spanish Formula 1 racing driver who drives for Ferrari 18. Alex Rodriguez - $30.3 Million American baseball player of Dominican descent who plays for the New York Yankees 10. Lionel Messi - $41.3 Million Argentine soccer player who plays for FC Barcelona 9. Cristiano Ronaldo - $44 Million Portuguese soccer player who plays for Real Madrid

Annual Economic Conference 2013: Ponencias by Grupo CNE

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Rape in Colombia’s war unearthed

» Rape in Colombia’s war unearthed
09/06/13 09:03 from The Americas News: News and Headlines from Canada, South America & More - The Washington Post
Brigitte Carreño was only 12 when a warlord whose ­anti-guerrilla fighters had occupied this hamlet decided to make her his own. So one night, he lured the tiny, effervescent schoolgirl to the dark and dank headquarters he used to plan ope..
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