"For the last several days, there's been a bounce for Puerto Rico GOs," said J.R. Riegler, vice president of fixed-income indices at S&P Dow Jones Indices. "It's counterintuitive because you've got that multibillion-dollar deal in March, and with that heavy supply, you'd expect the yields to rise."
Still, the taxable equivalent of the bonds' yields, which are tax-exempt nationally and in each state, is around 11 percent right now, he said.
"The yield is getting attractive relative to the risk," he said.
Tax-exempt investment-grade debt had returned 2.55 percent year to date on the S&P National AMT-Free Municipal Bond Index as of Friday. Yields on the S&P Municipal Bond Puerto Rico General Obligation Index, meanwhile, were 7.53 percent last week, for a year-to-date return of more than 10 percent.
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"It's really been an incredible rally, which tells you the market is potentially going to give them access," said Daniel Berger, Municipal Market Data analyst. "There's an appetite for these bonds."
Recession and yields
Puerto Rico's economy is in a nearly unbroken eight-year recession, and last year, concerns about its financial state reached a fever pitch. The island has outstanding debt of about $70 billion. Its major population and revenue declines are raising questions about how it will pay off such a steep bill.
On Dec. 27, Puerto Rico bond yields hit 8.95 percent, the highest level on Municipal Market Data's benchmark scale on records going back to 1997.