Puerto Rico’s Capital Sees Blowout Demand for Rare Muni Sal
San Juan, the economic hub of Puerto Rico, triggered a rush for its $121 million muni-bond sale this week, as investors seized a rare opportunity to get exposure to island.
Buyers placed about $2.2 billion of orders for the tax-exempt and taxable general obligation bonds sold by the Municipality of San Juan, according to people familiar with the offering who asked not to be named because the information is private. The deal received orders from more than 50 firms, including traditional mutual funds focused on state and local debt, one of the people said.
“There’s just not a lot of issuance of BBB bonds this year, like virtually none, so if you’re a buyer like ourselves and looking for yield for stable underlying credits, there hasn’t been much that you can invest in,” said Andrew Clinton, chief executive officer of Clinton Investment Management. “It just came to the market at the right time. People are starved in terms of demand for that type of paper, and it was an attractive yield.”
See more: Higher Rates Create New Opportunities in Muni Bonds
Bonds that were sold Tuesday have rallied since, signaling that demand strengthened even more.
Tax-exempt debt due in 2051 was sold with a 5% coupon and a yield 4.9%, or 58 basis points above benchmark municipal debt, according to data compiled by Bloomberg. Those securities, the most actively traded of the bond offering, have gained since Tuesday’s initial pricing. The 2051 bonds changed hands on Thursday at an average yield of 4.77%.
A spokesperson from RBC Capital Markets, the deal’s underwriter, declined to comment. San Juan didn’t immediately respond to a request for comment.
