Nuveen Asset Management analiza el crédito de la Isla:

Nuveen Asset Management analiza el crédito de la Isla:   Presenta un crudo pero veraz retrato de la quiebra de Puerto Rico bajo el ELA y el Partido Popular.      «Ya Puerto Rico se quedó corto en su promesa de presentar un presupuesto balanceado para el Año Fiscal 2015, continuará viendo caer su economía y -como resultado de su reciente emisión de bonos- cambió un año de mejora de liquidez por muchos años de mayor riesgo de insolvencia«.   Lea el análisis completo aquí. Puerto Rico’s $3.5 Billion GO Deal: Cure or Symptom? Ratings:  (0)|Views: 815|Likes: 0 Published by Alerta Progresista «Puerto Rico bonds – particularly bonds that lack a lien on specific revenues or are not backed by healthy bond insurers – carry significant economic, fiscal and political risks. Investors should dispassionately review the legal protections afforded certain Puerto Rican bonds and carefully consider the likelihood the Puerto Rican economy can support the level of indebtedness required of the Commonwealth. We believe Puerto Rico has already fallen short of its promise to deliver a balanced Fiscal Year 2015 budget, will continue to see economic decline and – by virtue of its recent bond deal – has traded a year of improved liquidity for many years of increased risk of insolvency. Thus, the current rally in Puerto Rico bond prices appears to be largely unsupported by the trajectory of the credit and we expect the Commonwealth will once again face another liquidity crisis in the not too distant future.»

PuerPuerto Rico’s $3.5 BillionGO Deal: Cure or Symptom?

Puerto Rico’s bonds appear to be benefitting from a rally in prices on theheels of its $3.5 billion general obligation bond offering last week. Someinvestors undoubtedly see the successful deal and subsequent relief rally as asign that Puerto Rico has turned a corner. While the deal provides Puerto Ricowith approximately one year of liquidity, it does so while further burdening analready heavily leveraged and fiscally stressed issuer with additional debt. Inshort, Puerto Rico’s recent deal traded short-term relief from a liquidity crisisfor elevated risk to the Commonwealth’s long-term solvency.

Put another way, Nuveen Asset Management sees the deal as a symptom of PuertoRico’s economic and financial ills rather than a cure for those problems. As such, wedo not expect Puerto Rico’s bond rally to be durable. We believe continued economic weakening, escalating debt service obligations and the Commonwealth’s long-standinginability to deliver a balanced budget will almost certainly yield another liquidity crisis infairly short order. Tis paper examines features of the recent deal we find instructive, the challenges we see to Puerto Rico’s long-term solvency and a few common misconceptions andmisstatements made about the security features backing the Commonwealth’s generalobligation (GO) debt.

Use of Capitalized Interest Means the Fiscal 2015 BudgetWon’t be Structurally Balanced

Puerto Rico’s bond offering generated $422.7 million of capitalized interest – bondproceeds that are held to pay interest on a portion of the deal itself. Capitalized interest israrely used on GO debt as typically the entity issuing the debt already has the resourcesavailable to begin comfortably paying debt service on the new bonds. Capitalized interestis usually reserved for revenue bonds, where a project that will later provide the source ofdebt service payment needs time to be constructed and become operational. According to our research, Puerto Rico intends to use the $422.7 million of capitalizedinterest to pay substantially all of the interest due on the bonds in Fiscal Years (FY) 2014and 2015 (a portion of the FY2016 interest payments will also be made from capitalizedinterest). In FY2015 alone, Puerto Rico will utilize $269.8 million of capitalized interestto offset the cost of debt service on the new deal. A budget that relies on bond proceedsto partially pay for debt service as it comes due is, by definition, not a structurally