Puerto Rico’s record $3.5 billion sale of junk-rated municipal debt buys the struggling U.S. territory at least 15 months of financial breathing room. It took demand from hedge funds to get the deal done.
Puerto Rico, which had its debt cut to junk last month, set prices on $3.5 billion of general obligations after boosting the deal by $500 million as orders eclipsed the amount of securities offered. The bonds gained in initial trading.
What was Lloyds Banking Group’s Martin Chantree thinking? Four people with knowledge of the inquiry say he tipped off the bank’s trading position just ahead of its sale of sterling for the dollar. In the seven minutes etween his communication and the time Lloyds began executing the order on Jan. 13, 2013, the pound fell 16 basis points against the dollar, or 0.16 percentage point, its biggest move of the day, according to data compiled by Bloomberg. As the U.K. currency tumbled, costing Lloyds an estimated $750,000, Chantree told colleagues that maybe he shouldn’t have shared the information, two of the people said, according to reporting by Gavin Finch, Ambereen Choudhury and Liam Vaughan.
Puerto Rico, which had its debt cut to junk last month, began offering $3 billion of general- obligation bonds at yields ranging from 8.625 percent to 8.875 percent, according to a person with knowledge of the sale.