Just over a week ago COTTonLINE wrote of a change in Puerto Rico law whereby local jurisdictions that have issued municipal bonds can unilaterally change the terms of repayment - delay or stretch out terms. Our comment then was PR was becoming another Argentina - a financially irresponsible banana republic.
We were therefore entirely unsurprised that a hedge fund holding PR munis is suing the island government over this change, claiming it is unconstitutional. See the CNBC story for details.
In case it isn't clear, COTTonLINE takes the side of the bondholders. People, or governments, should not undertake debts they cannot repay.
