Free Republic

UBS AG is backing away from its own Puerto Rico bond funds, warning clients that they can no longer use them as collateral for certain loans after the island's financial troubles resulted in downgrades by major credit rating agencies. In a July 13 letter to clients, reviewed by Reuters, UBS’ Puerto Rico arm said it would contact investors to discuss alternatives. “The firm will also reduce to zero the collateral value assigned to all Puerto Rico closed-end funds shares,” UBS wrote to investors. Puerto Rico’s Governor Alejandro Garcia Padilla dropped a bombshell on holders of its $72 billion debt in...

As yet another key debt payment date closes in on Puerto Rico, here's a primer on what you should know, and who it will affect the most ahead of the deadline. Q: If the Puerto Rico Public Finance Corporation (PFC) doesn't pay bondholders on Aug. 1, will it be considered a default? A: Yes. According to Moody's vice president and senior credit officer, Ted Hampton, if there is no payment made on Friday, it will be the first default of a U.S. state, or state-like entity, since Arkansas couldn't make its bond payments during the Great Depression in 1933. Q:...