Data as of June 26, 2015:
The investment grade municipal bond market has managed to hold steady with a modest negative return of -0.37% through June 26th 2015. Investment grade corporate bonds have returned -1.13% during the same period.
High yield municipal bonds have been pulled downward by Puerto Rico but have still managed to eek out a positive return of 0.59%. Meanwhile, junk corporate bonds have returned 3.7% year-to-date.
Select Fixed Income Index Yields and returns:
This past weekend Puerto Rico’s governor has stated the public debt is un-payable. Last week, the G.O. debt had plumbed new depths helping to record a negative 5% month-to-date return for the S&P Municipal Bond Puerto Rico General Obligation Index. The facts are the situation isn’t looking good: the pending PREPA July 1st default looms on the market, the possible restructuring of the Government Development Bank debt and the possible postponement of G.O. set – asides have sent alarms to G.O. bond holders.
Select Municipal Bond Indices: (Month-to-Date)
After years of turmoil, the events in Puerto Rico are beginning to come to a boil. The impact of defaults on the rest of the bond market, if any, remains to be seen.
This article was written by J.R. Rieger, global head of fixed income, S&P Dow Jones Indices.
© S&P Dow Jones Indices LLC 2013. Indexology® is a trademark of S&P Dow Jones Indices LLC (SPDJI). S&P® is a trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a trademark of Dow Jones Trademark Holdings LLC, and those marks have been licensed to SPDJI. This material is reproduced with the prior written consent of SPDJI. For more information on SPDJI, visit http://www.spdji.com