Puerto Rico bond tender offers

Jeffrey Wilens

Anyone familiar with what's going on with Puerto Rico GO bonds? Apparently, they finally worked out some sort of resolution for the long-defaulted bonds. But how would you handle these references in Quicken:

74514LVN4 6 07/01/38(US74514LVN45) Tendered to US74599CBR51 1 FOR 1 (74514LVN4 6 07/01/38, 74514LVN4 6 07/01/38, US74514LVN45)

I can tell you 74514LVN45 was the original CUSIP when issued and it looks like the new cusip is 74514LT56 although a search for that cusip does not find anything yet.
I don't know what "US74599CBR51" refers to.

NotACPA

Exactly WHERE in Q are you seeing that string?  A screenshot (posted here as a JPG) would be helpful.

Jeffrey Wilens

After downloading transactions from the broker, there was a popup screen asking if this was a newly acquired bond/stock or one or should be matched to an existing bond/stock. I chose existing and manually linked it to the Puerto Rico bond (same bond) I already have. There is no way to screenshot it as it is a one time thing. This happens any time you download a transaction involving a different CUSIP or ticker than the investments in the existing account.

q_lurker

a) I would likely opt to match the new security to a new security, not the old one.
b) It appears to me that the new one is being exchanged for the old one.  If so, I would consider the Corporate Acquisition with the new acquiring the old apparently as a 1-for-1 exchange.

Jeffrey Wilens

Right, but right now I can't get any information about this "new" bond. Looking up the new cusip, nothing appears. Maybe in the future the new terms of the bond will be revealed, it might have a different coupon, maturity date, etc.

q_lurker

If you accept the new security now as matching the existing one, when you get the new data, you will need to undo that match and create the new. 

If you go the new as new route now, you will need to make up data now and redo it as you get the real data. 

Probably six of one, half dozen of the other. Take your pick. Long term, I would not want it looking like one (the same) bond from initial purchase to final interest payments and sale. 

Tom Young

I'd delete the download and wait until I figured out exactly the consequences here.  Puerto Rico is coming out of bankruptcy and you'll probably end up taking a haircut (loss) on your old bonds, as I read the news. 

In order to recognize that loss you'll need to "sell" the old bond and use the "proceeds" to buy the new bond.  Associating the downloaded new bond with either the old bond or creating a new bond won't get you to the correct answer, I don't think.

Jeffrey Wilens

The problem is sometimes the "new bond" is not treated as a sale of the old bond and a fresh start, but instead as a new bond that carries the same cost basis of the old one so you cannot capture a capital gain or loss immediately....and sometimes it is the other way. So I agree I will have to wait. I am pretty sure the new bond will have new cusip and will match up, but the tax treatment or the terms of the new bond is not revealed yet.

I was just wondering if another Quicken user had some of these bonds and maybe found different information than my guesses.

Jeffrey Wilens

It's much much more complicated than I feared.  The new bonds are issued and it's not a 1 for 1 exchange, but investors are getting multiple bonds with different maturity dates and interest rates (some are zero coupon).

Original bonds I bought were 74514LVN4 6 07/01/38.  These are now exchanged for Series 2022A bonds paying current interest with different maturities from 2023 to 2046 and capital appreciation bonds (zero coupon bonds) with maturities in 2024 and 2033.  I now have about 10 news positions.  A nightmare for Quicken to figure out.