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Puerto Rico Debt Solutions (Not Hedge Funds) Get Boost From Report

Most hedge fund managers realize there is no such thing as a “risk free rate of return” any longer. All investments, particularly in debt that has previously defaulted, carries risk, which is why the return is elevated. Such is one apparent central argument in a Democratic study, “Profit At Any Cost,” that advocates moving forward on solutions for Puerto Rican debt. The report was prepared by the Democratic staff of the House Natural Resources Committee and reviewed by Bloomberg.

Hedge Funds involved in Puerto Rican debt

Puerto Rico debt: hedge fund managers bet high risk and anticipated high returns, but now are not willing to accept the risk outcome

“Hedge fund managers bet that the high risk was a chance for higher profits,” said the Democratic study, noting what typically is standard operating practice. When a hedge fund makes an investment typically the risks and rewards are clearly documented, and one of the known risks in bond investing is default. “Puerto Rican families should not be required to pay the price of that miscalculation, in which they had no part.”

The Puerto Rican debt debate is beginning to open to the public eye, as the Bloomberg report confirmed what...