Is Puerto Rico the next Lehman Brothers? So asks one Chadds Ford money manager who sees parallels between Puerto Rico and the ill-fated brokerage firm Lehman, which went bankrupt at the height of the 2008 financial crisis.
"It sounds a bit scary," says Jonathan D. Smith, chief investment officer of DT Investment Partners. "There was a lot of positive buzz after Puerto Rico's last bond-issue deal was so successful - as there was when [billionaire investor] George Soros took a stake in Lehman. But now it's cooling off, and getting worse with the fiscal emergency bill they signed."
On June 25, the governor of Puerto Rico introduced legislation to establish a debt restructuring for public corporations in the commonwealth during an economic emergency, and it's expected to be signed by Monday.