August 4, 2015 Comments (0) Blog, Securities Fraud

Recovery of Puerto Rico Public Financing Corporation Bonds Losses

(Last Updated On: August 4, 2015)

Have you suffered losses investing in Puerto Rico Public Financing Corporation bonds?  If so, the securities attorneys of The White Law Group may be able to help you recover your losses in a FINRA arbitration claim against the brokerage firm that recommended the investment.

The Puerto Rico Public Financing Corporation (Corporación para el Financiamiento Público de Puerto Rico) (“CFP”) is the government owned corporation of the government of Puerto Rico that issues government bonds to finance the different agencies of the executive branch of the government of Puerto Rico.  CFP is a subsidiary of the Puerto Rico Government Development Bank.

On Monday, the Government Development Bank announced that it would only make a partial payment on its CFP debt.  This is the first-ever default on Puerto Rico debt.  “Due to the lack of appropriated funds for this fiscal year the entirety of the PFC payment was not made today,” said Melba Acosta, the president of the Government Development Bank, in a statement.  This is the first time the U.S. territory has missed a payment on its $72 billion in bonds outstanding. Further defaults could hit investors widely, as nearly one out of every three U.S. municipal mutual funds have holdings in Puerto Rico.

“Moody’s views this event as a default,” Emily Raimes, vice president at Moody’s Investors Service, said in a statement, adding that payment of “debt service on these bonds is subject to appropriation, and the lack of appropriation means there is not a legal requirement to pay the debt, nor any legal recourse for bondholders.”

“This event is consistent with our belief that Puerto Rico does not have the resources to make all of its forthcoming debt payments. This is a first in what we believe will be broad defaults on commonwealth debt,” she added.

Standard and Poor’s separately classified the lack of payment as a default, lowering the Public Finance Corporation debt to a “D” rating from “CC.”

“We believe the default signals severe liquidity distress, whereby Puerto Rico must now choose among which financial obligations it can honor, and presages other possible defaults as liquidity becomes further constrained during the next few months,” S&P said in a statement Monday.

Some of the specific bonds issued by the CFP include:

  •  Puerto Rico Public Finance Corporation 2001 Series C Bonds – $771,274,288.85
  • Puerto Rico Public Finance Corporation 2001 Series E Bonds – $1,095,845,000.00
  • Puerto Rico Public Finance Corporation 2002 Series A Bonds – $580,071,037.40
  • Puerto Rico Public Finance Corporation 2003 Series A Bonds – $47,935,000.00
  • Puerto Rico Public Finance Corporation 2003 Series B Refunding Bonds – $272,560,000.00
  • Puerto Rico Public Finance Corporation 2003 Series C Refunding Bonds – $61,244,786.55
  • Puerto Rico Public Finance Corporation 2004 Series A Bonds – $1,206,130,000.00
  • Puerto Rico Public Finance Corporation 2004 Series B Bonds – $146,895,000.00
  • Puerto Rico Public Finance Corporation 2011 Series A Bonds – $242,430,000.00
  • Puerto Rico Public Finance Corporation 2011 Series B Bonds – $437,645,000.00
  • Puerto Rico Public Finance Corporation 2012 Series A Bonds – $410,665,000.00

Brokerage firms that sell such products are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of the client’s age, net worth, investment experience, and investment objectives.  Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

If you suffered losses investing in Puerto Rico Public Financing Corporation bonds and would like a free consultation with a securities attorney, please call The White Law Group at 312/238-9650.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

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