Socorro Olivencia, a retired business consultant with a Ph.D. in Industrial Organizational Psychology, and her husband, Juan Sanchez, bought their Cofina bonds back in 2007, when they were looking for long-term saving options.
Olivencia, 68, described the Cofina security as "the best bond at the moment." The government was strong, she said, and the couple looked at the bonds as a secure way to save for their retirement.
The bonds that Socorro and Juan purchased have lost $150,000 of their value to date and are set to mature in 2044.
Maria Colon, a 51-year-old single mother with fibromyalgia, relies on interest payments from Puerto Rican Cofina bonds as her main source of income due to her disability. She said she is now facing nearly $600,000 in losses to date on her investments in Cofina and various other Puerto Rican bonds.
For resident bondholders relying on interest payments like Colon, the situation looks grim.
A recent decision by Justice Laura Taylor Swain, the New York federal judge overseeing the island's massive bankruptcy process, ordered that the $16 million interest payment due to Cofina bondholders on June 1 be held by the trustee until a decision is made as to which bondholder group has the legal right to that money.
Judge Swain's decision to freeze the payments is already being felt on the island.
Puerto Rico's bonds were a popular way for people in the U.S. territory to save for retirement — they carried a triple tax exemption with yields, far above what a bank would offer even in high-yield savings accounts.