With much fanfare, on Friday, Sept. 18, President Trump abruptly shifted his policy on rebuilding Puerto Rico. Where he had often disparaged the island’s leaders and opposed rebuilding a power grid and other infrastructure that was destroyed by Hurricane Maria in September 2017, Trump now claimed, “I’m the best thing that ever happened to Puerto Rico. No one even close,” as he announced the release of $13 billion in assistance. (“Trump shifts on Puerto Rico, releases aid as election nears,” AP, https://apnews.com/02c9eba973414d44f2f24cc06a2871da)
He mentioned the restoration of pharmaceutical manufacturing as a reason for the aid, noting that the 1996 repeal of tax incentives for the industry had been a cause of Puerto Rico’s economic malaise. He reiterated that PR’s governance was corrupt.
We are in agreement on nearly all elements. Here’s a piece we published on reinstatement of the Puerto Rican pharmaceutical industry as a key element in rebuilding the medical supply chain production that Americans depend on, restoring it to American soil, under direct American supervision: “Trump Opportunity, Puerto Rico, Pharma,” May 13, 2020, https://www.cumber.com/cumberland-advisors-market-commentary-trump-opportunity-puerto-rico-pharma/.
That piece triggered some discussion among our readers. Other observers piled on. Some public editorial commentary occurred. Private conversations with some politicians and their counselors ensued and suggested that a Puerto Rico policy change could be in the offing.
Finally, and now right before the election, there is some movement.
Well, it’s better late than never.
Disclosure: Cumberland has a specific municipal bond management style focused on Puerto Rico debt. We have carefully assessed where each debt issue in the portfolio fits in the Commonwealth’s complex credit structure as competing claims are resolved and restructuring is accomplished. Email me if you want to have a conversation about Puerto Rico, and I will connect you with the appropriate Cumberland person.
David R. Kotok
Chairman of the Board & Chief Investment Officer
Email | Bio
