CPI: the main bidders in the Title III bankruptcy

On October 19, 2017, CPI mapped the main bidders in PROMESA Title III. The Mutual Fund Group — Oppenheimer Funds, Franklin Mutual Advisers and Santander Asset Management (First Puerto Rico Family of Funds) — claims the largest block: $7.2 billion in General Obligation, COFINA, PREPA and HTA. Goldman Sachs Asset Management and UBS also claim, outside the group. Oppenheimer, the day María made landfall, was still questioning that the Government could not pay its $74.8 billion debt.

Oppenheimer leads with $4.9 billion ($1.5 billion GO, $1.9 billion COFINA, $394 million HTA, $957 million PREPA). Franklin totals $1.8 billion (second Title III creditor; also $294 million in the Ad Hoc GO). Santander seeks $478 million in GO, COFINA and HTA. UBS Family of Funds: $1.4 billion across 89 funds (COFINA, HTA, Retirement). Oppenheimer and Franklin felled the “criollo bankruptcy” in 2014 and lobbied against Chapter 9 for Puerto Rico. Massachusetts Mutual (MassMutual) is Oppenheimer’s parent (~$191 billion AUM as of Dec 2016).

CPI contrasts Oppenheimer’s pre-María optimism (even after May 2017: market “liquid”) with the blow to repayment sources: prepared-food SUT suspended since October 8; tolls uncollected for a month; PREPA infrastructure destroyed. Millstein (June 2017) cited Board Fiscal Plan cuts of 62–79% vs García Padilla’s offer of ~32%. Holding GO and COFINA at once creates a conflict of constitutional priorities vs SUT. William Galvin (Massachusetts) opened an inquiry into sales of funds with PR bonds to retail investors.

Two Board members (José Ramón González, Carlos García) have Santander pasts; CPI notes First Puerto Rico fund liquidations after their appointments and a suit over incomplete disclosures. Goldman privatized PR-22/PR-5 (~$1.4 billion, 40 years) under Fortuño. A creditor claim ≠ a judgment. Title III is restructuring, not adjudicated theft.