The Securities Litigation Expert Blog

The Puerto Rico Municipal Bond Crisis in One Chart

Posted by Jack Duval

Nov 6, 2013 3:50:38 AM

In our continued examination of how the Puerto Rico debt crisis came to be, we have identified two telling data points:  since year-end 2005, Puerto Rico real GDP has declined by eight percent.  Over the same time period, Puerto Rico Gross Public Debt has increased by over 76 percent.  The trends are clear in the chart below.

For a high resolution version of the chart, click Puerto Rico Real GDP v. Gross Public Debt.

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Topics: CEF, GDP, Puerto Rico, UBS, litigation, investments, municipal debt crisis, debt

Student Loan Bubble Update

Posted by Jack Duval

Apr 15, 2013 3:14:16 AM

Here's a link to the New York Federal Reserve PowerPoint on the state of student loans.  (NYFR)  Fun facts:

  • 44 percent of borrowers are not in repayment yet;

  • 1/3 of borrowers who are in repayment are delinquent

See our previous coverage of the student loan bubble here.
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Topics: New York Federal Reserve, Student Loan Bubble, investments, fixed income, debt

The Yield Bubble - China Edition

Posted by Jack Duval

Mar 29, 2013 4:05:53 AM

Yields on Chinese junk bonds have fallen by 30-40 percent over the past two years, as the hunt for yield goes global.  (NYT)  If "Chinese High Yield Debt" doesn't put the fear of God in you, read this:

Chinese junk bonds also have a unique structure, which could leave investors vulnerable.  Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.  The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Investment advisors should be checking any high yield funds they have for China exposure, as this will surely end badly.
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Topics: investments, high yield, yield bubble, fixed income, China, debt

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