(Delavan, WI) “Paul Ryan appears to be helping some very big investors to engineer an extremely lucrative failure,” said Paul Nehlen early today. Nehlen is the insurgent candidate challenging Ryan for the congressional seat in Wisconsin’s 1st District.
“I now have a very strong sense of why Paul Ryan is so determined to ram this Puerto Rico bailout through Congress before the Memorial Day weekend,” Nehlen asserted. “He needs this travesty to go through like greased lightning before its true purpose is well understood by the public or their representatives. He needs other legislators to be at least unwittingly complicit in this vote so it ‘s harder for people to point a finger at him.
“Hedge funds hold the majority of Puerto Rico ‘s general-obligation debt. And hedge funds, in particular, have feigned rejection of Paul Ryan ‘s Puerto Rico bailout, claiming it will hurt them. But it ‘s clear from a $1.3 billion block trade earlier this year that at least one very heavy hitter is simply playing for time, waiting for Puerto Rico ‘s problems to grow worse. Why? Because, essentially, the bigger Puerto Rico ‘s problems get, the bigger the cash-in once that bailout plan goes through.”
“Those watching this situation know that the Puerto Rico Government Development Bank (GDB) has asked general-obligation debt holders to take a 47 percent haircut on its bonds. That would mean 53 cents on the dollar. But the block trade was made for 4.375% taxable 2019 GDB senior notes at 23.5 cents on the dollar. That would net this as-yet unknown entity a 125 percent return. That ‘s one whole lot of cash at the expense of others. And the fact is, an investor like this who wants to cash in absolutely wants the federal government involved in a bailout. That ‘s their backstop, their way of ensuring that, no matter what happens or how many other people lose on this mess, they win big.
“Paul Ryan ‘s Puerto Rico bailout increasingly looks to be the insurance policy for people who are likely committing massive fraud. Any federal representative who doesn‘t want to absorb the stench of this thing should be backing away from the Puerto Rico plan and insisting on a full investigation first.”
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