September 26, 2017 / 9:06 PM / 10 months ago

Puerto Rico bonds sink to all-time low, post-hurricane trading picks up

Sept 26 (Reuters) - Benchmark Puerto Rico bonds fell to an all-time low on Tuesday amid an increase in trading in the U.S. municipal market since last week’s landfall of Hurricane Maria.

The U.S. territory’s general obligation bonds due in 2035 with an 8 percent coupon, which traded down to $53 on Monday, sank to around $52 of its $100 par value, according to Municipal Market Data, a unit of Thomson Reuters.

Bond prices have tumbled since the island was hit on Sept. 20 by Maria, its strongest storm in nearly 90 years, resulting in widespread destruction. Trading, which had been thin, grew heavier on Tuesday, with several $1 million-plus transactions.

With the power grid largely destroyed by Hurricanes Maria and Irma and people fleeing the island, prices could slide even further.

“I really think its not even a matter of weeks but a matter of months until we are really able to gauge how much of a setback these storms have been to the island,” said David D. Tawil, president of Maglan Capital.

Another uncertainty is Puerto Rico’s ongoing bankruptcy case, which aims to restructure $72 billion of debt. The island’s government on Monday requested a four-week extension to assemble evidence as well as a delay in a hearing scheduled for next month.

“All of this debt has steadily moved down to where (investors) think the settlement will be,” said Daniel Berger, senior market strategist at MMD. (Reporting By Karen Pierog; editing by Grant McCool)

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