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UBS offers buyback of some Puerto Rico bond fund shares

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November 25
11:28 PM 2013

Switzerland's biggest bank UBS said it will be undertaking a buyback program for some shares of its Puerto Rico bond funds. The move came just after a 16% loss of Puerto Rico's debt this year. In an emailed statement to Bloomberg, UBS spokeswoman Karina Byrne said the share repurchase will only be made for funds that are under the sole management of UBS. The offers made would be at the net-asset value or lower. Byrne added that they had already informed advisers to get in touch with clients holding the commonwealth's closed-end funds as well as clients who hold UBS Bank USA loans that are secured by the closed-end funds regarding the bank's buyback program.

According to Byrne, there is a cap to closed-end funds so that no more than 25% of the outstanding shares in the life of the investment are repurchased. She added that there are some funds that are nearer the cap than others and they may opt not to reach the limit with this repurchase.

Citing data from Standard & Poor's, Bloomberg reported that debt sold by Puerto Rico and its localities suffered when it plunged 16% this year through November 22. It was the debt's worst performance in about 14 years. Concerns over the commonwealth's finances have caused yields on Puerto Rico's securities to skyrocket in 2013, the report added. The island's economy has been struggling to grow for the past seven years.

Information from the UBS website showed that as of November 20, shares of one of the Swiss bank's closed-end offers, the Puerto Rico Fixed Income Fund, had a net asset value of USD 3.65. A July 2003 prospectus showed that they were sold to the public at USD 10 apiece, Bloomberg reported.

Last month, the bank said it placed a financial adviser in Puerto Rico on administrative leave while it evaluated loans issued to clients.

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