Message of Puerto Rico Debt Crisis: Easy Bets Sometimes Lose -<br />By MICHAEL CORKERY and MARY WILLIAMS WALSHMAY 4, 2017<br />When some of Wall Street’s savviest hedge funds piled into Puerto Rico’s debt in 2014, it seemed like an easy bet: Buy up the island’s bonds at a discount, pocket the high interest<br />and persuade politicians to make decisions that would raise the value of their investments.<br />“I think most funds expected there would have been a consensual agreement by now.”<br />It does not take long to see why a solution to Puerto Rico’s debt problem has eluded the hedge funds and other investment firms<br />that own the island’s bonds: Many of the creditors think they are, or should be, first in line for the money.<br />The unprecedented legal filing came only a few days after hedge funds<br />and other holders of Puerto Rico’s general obligation debt thought they had cut a deal with the government to avoid bankruptcy.<br />Hector Negroni, co-chief executive of FCO Advisors, which is invested in Puerto Rico bonds, said the oversight board had failed to honor constitutional protections for bondholders<br />and to carry out its duty to force the government to tighten spending.
