- Fitch becomes the 3rd and last of the major ratings agencies to cut Puerto Rico's municipal debt to a junk rating. "Recent downgrades have triggered new liquidity requirements and lowered expectations for the market available for the commonwealth's debt going forward."
- In the meantime, Puerto Rico is going through with its debt offering, and has hired Barclays to lead the sale.
- The junk ratings look to be forcing about $13B of Puerto Rico's $70B in muni debt out of Barclays' benchmark municipal bond index, and passive ETFs will likely be forced sellers of Puerto Rican paper, though most mutual funds can continue to hold.
- Monolines: MBIA (MBI -1.6%), Assured Guaranty (AGO +1.2%), Ambac (AMBC +2.4%).
- Muni ETFs: MUB, HYD, PZA, MUNI, TFI, ITM, HYMB, MLN, XMPT, SHM, SUB, PRB, SMB, PVI, SHYD, SMMU, MUAF, MUAE, MUAD, MUAG, MUAC, VRD, GMMB, RVNU