After Hurricane Maria, Mutual Fund Company Franklin Resources Sells Hundreds of Millions of Dollars of Puerto Rico Bonds

According to The Wall Street Journal, Franklin Resources Inc. (BEN), has sold hundreds of millions of dollars of Puerto Rico bonds in the wake of the devastation of Hurricane Maria. This includes Franklin Mutual Advisers LLC’s decision to sell its $294 million stake in the U.S. territory’s general obligation bonds.

Franklin, also known as Franklin Templeton, is the second largest holder of Puerto Rico bonds among mutual funds. OppenheimerFunds (OPY) is the largest.

The Wall Street Journal said that Franklin is not the only one trying to get rid of its Puerto Rico bonds. According to sources, a “swath of mutual funds and hedge funds” have finally given up on the island’s securities, too. For example, Merced Capital and Varde Funds sold their $172 million in Puerto Rico municipal bonds to other bondholders.

Even though the island’s bonds have been troubled since they plunged in value four years ago, causing thousands of investors to suffer massive losses, this did not keep distressed debt investors away from Puerto Rico’s bonds. A number of hedge funds, mutual funds, and speculators continued to buy the debt, hoping it would result in a windfall return. Now, however, the destruction and havoc wreaked by Maria is taking further financial toll.

These latest troubles come just months after the US territory sought bankruptcy protection. Earlier this month, credit rating agency Moody’s downgraded the territory’s general obligation bonds to Ca3 because of the damage Maria caused to the island. The bonds had been rated Caa3. Bonds from both the Puerto Rico Aqueduct and Sewer Authority and the Puerto Rico Sales Tax Financing Corp. received the same downgrade.

Puerto Rio Bond Fraud Cases
Our Puerto Rico bond fraud and closed-end bond fund attorneys represent investors that are trying to get back the money they lost from investing in Puerto Rico securities. Many of these investments were inappropriately recommended by brokers at UBS Puerto Rico (UBS-PR), Banco Popular, Oriental Securities, Morgan Stanley (MS), Santander Securities (SAN) and other brokerage firms. Contact Shepherd Smith Edward and Kantas, LTD LLP today for a free, no obligation consultation about your investment issues.

Bond Funds Dump Puerto Rico, The Wall Street Journal, October 25, 2017

Puerto Rico (Commonwealth of), Moody’s

More Blog Posts:
Oppenheimer Funds and Other Mainland Funds Take Financial Hit in the Wake Up of Hurricanes, Stockbroker Fraud Blog, October 14, 2017

Wells Fargo Brokerage Firms Ordered to Pay $3.4M Over Unsuitable Exchange-Traded Product Recommendations, Stockbroker Fraud Blog, October 16, 2017

NY Investment Adviser Accused of Bilking a Non-Profit of $9M, Institutional Investor Securities Blog, October 23, 2017