A group of hedge funds, who hold a large proportion of Puerto Rico’s debt, are now demanding for Puerto Rico’s government to fire teachers, collect more taxes, and reform labor laws, as the U.S. territory contemplates default. This is the battle between bondholders vs. the people, and it is not going to end nicely.
While hedge funds may be buying up distressed bonds and then demanding full payment, these types of vulture funds will eventually lose everything. The entire government debt structure is just out of control. Puerto Rico will be the first quasi-state to go belly-up. Others will most assuredly follow. Welcome to Big Bang.
