Jeffrey Gundlach places big bet on Puerto Rico

DoubleLine Capital chief more than doubles holdings in island's junk-rated debt.
MAY 06, 2015
By  Bloomberg
DoubleLine Capital's Jeffrey Gundlach has more than doubled the holdings of junk-rated Puerto Rico debt in his Income Solutions Fund to $45 million. The $2.28 billion fund's investment in Puerto Rico general-obligation bonds as of March 31 was up from $20 million the prior month, according to data compiled by Bloomberg. The fund didn't hold any commonwealth debt at the end of 2014. The securities fell to an average price of about 79.8 cents on the dollar on April 22, the lowest since the debt was first sold in March 2014. The bonds, which mature in 2035, traded Monday at an average price of 80.2 cents to yield 10.4%. (More: Power utility bond investors score win against Puerto Rico law) Puerto Rico bonds, which are tax-exempt nationwide, have traded at distressed levels for more than a year amid speculation the commonwealth and its agencies won't be able to repay $73 billion of debt. Municipal bonds sold in Puerto Rico lost 0.87% this year through April 24, the worst annual start since at least 2007, according to S&P Dow Jones Indices. BETTING ON PUERTO RICO Gundlach is among investors betting on Puerto Rico. A group of 34 hedge funds with $4.5 billion of its debt has said the island has potential to turn around. Among its members is New York-based Stone Lion Capital Partners LP, said Russ Grote, a Washington-based spokesman for the group. Others include Brigade Capital Management, Centerbridge Capital Partners LP, Davidson Kempner Capital Management LP, Fir Tree Partners and Monarch Alternative Capital LP. (More: Gundlach and DoubleLine reach top of the bond fund mountain) The Income Solutions Fund is a closed-end fund. Corporate debt is its largest allocation, accounting for almost 70% of holdings, Bloomberg data show. The Puerto Rico securities are the fund's only municipal bonds, taking up about 1.3% of assets. DoubleLine also had $2.5 million of the same general obligations in its $129.6 million Multi-Asset Growth Fund at the end of March, Bloomberg data show. Loren Fleckenstein, an analyst at Los Angeles-based DoubleLine, said the company declined to comment.

Latest News

Advisor moves: LPL welcomes $750M Osaic team, Raymond James recruits Wells Fargo duo in New York
Advisor moves: LPL welcomes $750M Osaic team, Raymond James recruits Wells Fargo duo in New York

Elsewhere in Utah, Raymond James also welcomed another experienced advisor from D.A. Davidson.

UBS loses arbitration battle in fiduciary fight over foundation funds
UBS loses arbitration battle in fiduciary fight over foundation funds

A federal appeals court says UBS can’t force arbitration in a trustee lawsuit over alleged fiduciary breaches involving millions in charitable assets.

RIA moves: NorthRock adds $800M Parkside Advisors, NFP acquires Levine Group in Tennessee
RIA moves: NorthRock adds $800M Parkside Advisors, NFP acquires Levine Group in Tennessee

NorthRock Partners' second deal of 2025 expands its Bay Area presence with a planning practice for tech professionals, entrepreneurs, and business owners.

Three easy ways to boost your firm’s impact this summer
Three easy ways to boost your firm’s impact this summer

Rather than big projects and ambitious revamps, a few small but consequential tweaks could make all the difference while still leaving time for well-deserved days off.

Hightower taps Osaic alum Scott Hadley as first chief advisory officer, expands C-suite
Hightower taps Osaic alum Scott Hadley as first chief advisory officer, expands C-suite

Hadley, whose time at Goldman included working with newly appointed CEO Larry Restieri, will lead the firm's efforts at advisor engagement, growth initiatives, and practice management support.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.