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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 35 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
My company:
The Law Offices of Robert Wayne Pearce, P.A.
My blog:
The Investor's Rights Law Blog
  • MORE HEADWINDS FOR UBS PUERTO RICO BOND FUND INVESTORS 0 comments
    Dec 27, 2013 2:11 PM

    Three weeks ago, Fitch Ratings placed Puerto Rico's BBB minus credit rating on negative watch which meant the next step was to downgrade Puerto Rico's general obligation bonds to junk status. Yesterday, the Moody's Investors Service joined in Fitch Ratings' analysis and placed Puerto Rico's general obligation bonds and related credit on review for possible downgrade to junk bond status as well. Both Moody's and Fitch, as well as Standard & Poors rate Puerto Rico debt a single level above junk. All three rating agencies have expressed concerns about the Island's inability to access the market for refinancing at reasonable rates; the extent to which budget targets for the current fiscal year are being met; the instability in the performance of the Puerto Rico economy.

    All three of these rating agencies have impacted Puerto Rico bond prices and consequently the value of the UBS Puerto Rico closed-end bond funds held by so many Puerto Rico investors. Undoubtedly, the net asset values (NAVs) of the various funds which have continued to move downward will decline further when the reports are released next week. The most recent NAV's published on December 4, 2013, put the value of the funds as follows:

    Name of the Fund - NAV

    • Tax-Free Puerto Rico Fund 5.02
    • Tax-Free Puerto Rico Fund II 4.55
    • Tax-Free Puerto Rico Target Maturity Fund 4.46
    • Puerto Rico AAA Portfolio Target Maturity Fund 7.65
    • Puerto Rico AAA Portfolio Bond Fund 7.24
    • Puerto Rico AAA Portfolio Bond Fund II 8.17
    • Puerto Rico GNMA & US Govmt. Target Maturity Fund 8.00
    • P.R. Mortgage-Backed & US Govmt. Securities Fund 6.12
    • Puerto Rico Fixed Income Fund 3.53
    • Puerto Rico Fixed Income Fund II 4.13
    • Puerto Rico Fixed Income Fund III 3.93
    • Puerto Rico Fixed Income Fund IV 5.04
    • Puerto Rico Fixed Income Fund V 4.46
    • Puerto Rico Fixed Income Fund VI 5.38
    • Puerto Rico Investors Tax-Free Fund 4.06
    • Puerto Rico Investors Tax-Free Fund II 3.91
    • Puerto Rico Investors Tax-Free Fund III 4.32
    • Puerto Rico Investors Tax-Free Fund IV 3.80
    • Puerto Rico Investors Tax-Free Fund V 4.17
    • Puerto Rico Investors Tax-Free Fund VI 4.92
    • Puerto Rico Tax-Free Target Maturity Fund 0.96
    • Puerto Rico Tax-Free Target Maturity Fund II 1.60
    • Puerto Rico Investors Bond Fund 4.37

    Notwithstanding, UBS Puerto Rico, Santander Securities, Popular Securities, Merrill Lynch and Oriental Financial Advisors have continued to recommend the funds as good investments. A large number of investors have called our offices with stories about how their brokers claim this is a buying opportunity. Nothing could be further from the truth as evident by all three agencies ratings! These financial advisors simply have no reasonable basis for their recommendations.

    The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

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