There is gap between the par amount and market value of Puerto Rico municipal bonds that has now broached over $40billion. While some of this can be accounted for as zero coupon debt, the fall in market value of the S&P Municipal Bond Puerto Rico Index is a startling reminder that credit and political risk can sting investors.
Year-to-date, Puerto Rico General Obligation bonds have returned a negative 4.07%. Meanwhile, high yield municipal bonds excluding Puerto Rico have been resilient. The S&P Municipal Bond High Yield ex-Puerto Rico Index has seen a total return (YTD) of 4.3%.
Chart 1: Total Par & Market Values of Bonds in the S&P Municipal Bond Index:
![Source: S&P Dow Jones Indices, LLC. Data as of May 4th 2016. Chart is provided for illustrative purposes and reflects hypothetical historical performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results.](https://www.indexologyblog.com/wp-content/uploads/2016/05/Blog-5-9-2016-Graph-PR-Par-Market-Value.png)
Table 1: Yields (Yield to Worst) and Year to Date Returns of Select Municipal Bond Indices:
![Source: S&P Dow Jones Indices, LLC. Data as of May 4th 2016. Chart is provided for illustrative purposes and reflects hypothetical historical performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results.](https://www.indexologyblog.com/wp-content/uploads/2016/05/Blog-5-9-2016-Table-on-Performance.png)
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