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Trump Claims Puerto Rico&#39;s Bond Debt Will Be &#39;Wiped Out,&#39; Here&#39;s Who&#39;d Lose Big

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Puerto Rico Wants To Become A State; Here&#39;s What That Means

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Muni Bond Expert On Puerto Rico: &#39;It&#39;s Going To Be More Than A Haircut&#39;

<a href="https://twitter.com/AP/status/986624266534817792" title="https://twitter.com/AP/status/986624266534817792">https://twitter.com/AP/status/986624266534817792</a>

'BREAKING: Island-wide blackout hits Puerto Rico, which suffering unstable power grid following hurricane.' - Associated Press

Puerto Rico bonds took a huge hit last week when President Trump suggested the U.S. government may eliminate the nation&rsquo;s debt in wake of its ongoing financial crisis.
&ldquo;They owe a lot of money to your friends on Wall Street, and we&rsquo;re going to have to wipe that out,&rdquo; Trump said in an interview with Fox News. Puerto Rico currently owes $13 billion of general-obligation debt and $72 billion in total debt.
Related Link: <a href="https://www.benzinga.com/general/education/17/06/9614337/puerto-rico-wants-to-become-a-state-heres-what-that-means">Puerto Rico Wants To Become A State; Here&#39;s What That Means</a>
The suggestion that bondholders could be the ones left holding the bag in Puerto Rico sent the price of the island&rsquo;s general obligation bonds tanking to just 37 cents on the dollar last Wednesday, down from 56 cents a month ago.
<h3>Who Loses?</h3>
<ul>
<li>Here&rsquo;s a look at some of the bondholders and bond insurers that could be hit hardest if Puerto Rico&rsquo;s slate is wiped clean.</li>
<li>Assured Guarantee Ltd. (NYSE: <a class="ticker" href="/stock/ago#NYSE">AGO</a>) had a net par exposure to Puerto Rico of about $5 billion as of the end of June.</li>
<li>Ambac Financial Group, Inc. (NASDAQ: <a class="ticker" href="/stock/ambc#NASDAQ">AMBC</a>) had a net par exposure of $2.1 billion as of the end of June.</li>
<li>The Baupost Group, managed by billionaire value investor Seth Klarman, <a href="https://theintercept.com/2017/10/03/we-can-finally-identify-one-of-the-largest-holders-of-puerto-rican-debt/">recently disclosed</a> that it owns nearly $1 billion in Puerto Rican debt. Klarman apparently doesn&rsquo;t personally own any Puerto Rican debt.&nbsp;</li>
<li>A group of hedge funds, including Aurelius Capital Management, Autonomy Capital (Jersey), FCO Advisors, Franklin Mutual Advisers, Monarch Alternative Capital, Senator Investment Group and Stone Lion, collectively owns $3.3 billion of Puerto Rican debt, according to new <a href="https://www.bloomberg.com/news/articles/2017-07-13/hedge-funds-disclose-just-how-many-puerto-rico-bonds-they-own">court documents</a>. Autonomy Capital holds the most general obligation debt of the group at $937.6 million.</li>
</ul>
<h3>Little Guy The Biggest Loser</h3>
Everyday Americans, including individual bond investors and mutual fund investors, reportedly have the largest <a href="https://www.cnbc.com/2017/10/04/if-you-dont-think-you-own-puerto-rico-debt-youre-most-likely-wrong.html?recirc=taboolainternal">overall exposure</a> to Puerto Rican debt. Puerto Rico Clearinghouse estimates that there are more than half a million individual Puerto Rican bondholders and hundreds of thousands of investors who own the bonds via funds such as the SPDR Series Trust (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), the Van Eck Vectors Short High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/shyd#NYSE">SHYD</a>) and the PowerShares New York AMT-Free Municipal (NYSE: <a class="ticker" href="/stock/pzt#NYSE">PZT</a>).
<h3>Time To Buy?</h3>
Surprisingly, some investors see Trump&rsquo;s words as an opportunity to buy. Highland Capital co-founder Mark Okada said his $18 billion hedge fund is looking into the possibility of buying Puerto Rican debt on the cheap.
&ldquo;I think people are overreacting to what Trump said,&rdquo; Okada said <a href="https://www.cnbc.com/2017/10/05/highland-capitals-okada-says-hes-taking-a-look-at-puerto-rico-bonds.html">last week</a>.
MKM Partners analyst Harry Fong also sees opportunity for investors.
&ldquo;The shares of the bond insurers are all down sharply today on Trump&rsquo;s comments and, in our view, this could present an opportunity to acquire the shares at well below fair value,&rdquo; he wrote. MKM maintains Buy ratings for Assured Guarantee and MBIA.
Related Link: <a href="https://www.benzinga.com/news/17/10/10148482/elon-musk-offers-to-rebuild-puerto-ricos-energy-infrastructure">Elon Musk Offers To Rebuild Puerto Rico&#39;s Energy Infrastructure</a>
_________ 
Image Credit: By Staff Sgt Michelle Y. Alvarez-Rea, U.S. Air National Guard (President Trump Visits Puerto Rico) [Public domain], <a href="https://commons.wikimedia.org/wiki/File:President_Trump_Visits_Puerto_Rico_171003-Z-KL947-224.jpg">via Wikimedia Commons</a>

Trump Claims Puerto Rico's Bond Debt Will Be 'Wiped Out,' Here's Who'd Lose Big

Earlier this month, 97 percent of Puerto Ricans who participated in a non-binding referendum voted in favor of Puerto Rico becoming the 51st U.S. state.
Puerto Rico has been officially classified as a U.S. commonwealth since it was annexed during the Spanish-American War of 1898. The territory has its own constitution, its own governor, has no vote in U.S. Congress and its residents only pay U.S. federal income tax on work performed within U.S. states. However, Puerto Rican residents pay into the U.S. Social Security system and have access to Medicare and Medicade. They can vote in presidential primary elections, but not the actual U.S. presidential elections.
<h3>Economic Woes</h3>
Puerto Rico is currently mired in a debt crisis that has been building for decades. In May, Puerto Rico filed for municipal bankruptcy due to the fact it cannot pay back more than $70 billion in debt. Poverty is common, and unemployment is high. Puerto Ricans who voted in the referendum likely hope that inclusion as the 51st state could help jump-start the territory&rsquo;s economy.
<h3>Path To Statehood</h3>
Unfortunately for Puerto Rico, residents have no official say in whether or not the territory becomes a state. The fate of Puerto Rico lies in the U.S. Congress, which would need to pass a statute admitting Puerto Rico as the 51st state. This vote is the same process that each new U.S. state since the 13 original colonies has undergone to gain statehood.
Related Link: <a href="https://www.benzinga.com/news/17/06/9564643/muni-bond-expert-on-puerto-rico-its-going-to-be-more-than-a-haircut">Muni Bond Expert On Puerto Rico: &#39;It&#39;s Going To Be More Than A Haircut&#39;</a>
Current Puerto Rican governor Ricardo Rossello has said he plans to take the referendum results to Washington and plead his case to Congress that Puerto Rico be admitted as the 51st state. However, the fact that only 23 percent of Puerto Rico&rsquo;s eligible voters participated in the referendum will likely weaken Rossello&rsquo;s case.
<h3>What Does It Mean For America?</h3>
For the rest of Americans, Puerto Rico&rsquo;s potential admission as a state likely wouldn&rsquo;t change much. Proponents of Puerto Rican statehood have even created the 51-star flag seen below to show how seamless the transition could be.
<img alt="" src="/files/u81483/flag.png" style="width: 480px; height: 253px;" />
If Puerto Rio follows the same path that Alaska and Hawaii took when they became states, the Senate would add two additional seats. However, the House of Representatives would likely stay at 435 total seats, meaning Puerto Rico could reduce certain other states&rsquo; representation. Puerto Rico would be given one automatic House seat, and would likely gain four additional seats based on population, according to <a href="http://www.thesocialcontract.com/artman2/publish/tsc_22_2/tsc_22_2_poston_farris.shtml">The Social Contract</a>.
Puerto Rican voters typically vote more Democratic than Republican, but the website <a href="http://www.pr51st.com/">PR51st.com</a> says Puerto Ricans are &ldquo;typically more socially conservative than the Democratic Party on the mainland&rdquo; and that it would be &ldquo;impossible to predict how Puerto Rico would vote&rdquo; in U.S. elections.
In a general sense, Puerto Rico could benefit from potential job growth and economic expansion if it becomes a state. Puerto Ricans would also enjoy the right to vote in the U.S. presidential elections, and the U.S. federal government would generate additional revenue from sales and income taxes.
On the other hand, the U.S. would add Puerto Rico&rsquo;s high crime, poverty and unemployment rates to its national statistics, and the U.S. would inherit all of Puerto Rico&rsquo;s economic problems.
<h3>Americans Weigh In</h3>
<a href="https://www.usatoday.com/story/opinion/2017/06/12/adding-puerto-rico-state-will-drag-us-say/102790290/">USA Today</a> recently asked Americans to weigh in with their thoughts about adding Puerto Rico as a state, and the responses were mostly negative. Readers were mostly concerned about the potential economic impact of the decision.
For now, Puerto Rico will maintain its territory status. Amid all the economic turmoil in Puerto Rico this year, the SPDR Series Trust (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), which has significant exposure to Puerto Rican <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/03/9227950/who-is-buying-municipal-bonds">municipal bonds</a>, is up 2.1 percent.&nbsp;

Puerto Rico Wants To Become A State; Here's What That Means

Puerto Rico&rsquo;s bankruptcy, <a href="https://www.benzinga.com/news/17/05/9404007/puerto-rico-goes-bankrupt-theres-going-to-be-losses">with $74 billion in debt at stake</a>, is the largest municipal default in history.
Despite the scope of the U.S. territory&rsquo;s financial troubles, one of the bond business&rsquo; most respected analysts said Puerto Rico&#39;s debt is unlikely to break the foundation of the muni market.
Lou Schimmel, 80, is a retired former executive director of the Municipal Advisory Council of Michigan and emergency manager in the Michigan cities Pontiac and Hamtramck. Today, Schimmel does turnaround consulting on a contract basis.
The buying of municipal bonds represents a loan from bondholders to government, and they should be paid back, Schimmel said. But that&rsquo;s isn&rsquo;t always possible.
&ldquo;At some point, when [finances] get bad enough, you go to bankruptcy. Not all bankruptcies are the same, but they are the same in the sense that somebody&rsquo;s not going to get 100 cents on the dollar.&rdquo;
The restructuring case before U.S. District Judge Laura Swain includes $74 billion in debt and $49 billion in unpaid pension liabilities.
The recovery level for Puerto Rico&rsquo;s 500,000 bondholders could range from 5 cents on the dollar to 75 to 80 cents on the dollar, depending on the type of debt, Puerto Rico Clearinghouse analyst Cate Long told Benzinga <a href="https://www.benzinga.com/news/17/05/9404007/puerto-rico-goes-bankrupt-theres-going-to-be-losses">in a recent interview</a>. Puerto Rico&rsquo;s proposed 2018 budget dedicates one-fifth of its $9.6 billion in spending on pension payments, <a href="https://www.bloomberg.com/news/articles/2017-05-31/puerto-rico-releases-9-6-billion-budget-tracking-recovery-plan">according to Bloomberg</a>. The territory&rsquo;s pension systems are projected to go broke by July, the wire service said.
Every stakeholder in Puerto Rico&rsquo;s restructuring will take some kind of loss, Schimmel said.
&ldquo;In Puerto Rico, it&rsquo;s going to be more than a haircut. It&rsquo;s going to be part of the scalp as well.&rdquo;
<img alt="" src="/files/images/2017/June/07/db_lou_schimmel.jpg" style="width: 500px; height: 333px;" />
Bond analyst and municipal turnaround consultant Lou Schimmel in downtown Detroit. Photo by Dustin Blitchok.
<h3>
	Lessons From Detroit</h3>
Detroit&rsquo;s July 18, 2013, filing for Chapter 9 bankruptcy with $18 billion in debt didn&rsquo;t have the rub-off effect on other municipal debt that some expected, Schimmel said.
&ldquo;It didn&rsquo;t ruin everybody next door. You look at what you&rsquo;re buying,&rdquo; he said, adding that &ldquo;each individual credit&rdquo; should be evaluated separately.
&ldquo;I don&rsquo;t believe Connecticut is going to have a higher interest rate because Puerto Rican bonds are in trouble.&rdquo;
In Detroit, the plan of adjustment approved Nov. 7, 2014 by U.S. Bankruptcy Judge Steven Rhodes incorporated a <a href="https://www.nytimes.com/2014/11/08/arts/design/grand-bargain-saves-the-detroit-institute-of-arts.html">$800 million &ldquo;Grand Bargain&rdquo; package</a> of public and private funds.
The money allowed the city to exit bankruptcy without selling pieces from the Detroit Institute of Arts to raise capital.
The appearance of a third party in the Puerto Rico case &mdash; for example, assist with pension shortfalls &mdash; wouldn&rsquo;t surprise Schimmel.
&ldquo;You never know in the situation who&rsquo;s going to show up,&rdquo; he said. &ldquo;If there&rsquo;s an outside source, all the better for the bondholders.&rdquo;
<h3>
	&lsquo;There Was No Other Option&rsquo;</h3>
When Schimmel served as emergency manager in Pontiac, a city of 60,000 located 30 miles north of Detroit, he paid off $87 million in debt.
Pontiac never declared bankruptcy, but Schimmel said the city had more options than Detroit or Puerto Rico.
&ldquo;There was no other option,&rdquo; Schimmel said of Puerto Rico&rsquo;s May 3 bankruptcy filing under PROMESA, a restructuring law signed by former President Barack Obama.
&ldquo;And that&rsquo;s why the bondholders made the mistake of misjudging who they loaned money to. I&rsquo;m on the side of the bondholder until it becomes impossible to get repaid.&rdquo;
Schimmel compared a bond default to taking out a mortgage without any intention of paying it back.
&ldquo;You honor it until it&rsquo;s [not possible]. You&rsquo;re going to have to break a promise.&rdquo;
A unique challenge for governments in distress is that they must continue to provide basic services while a restructuring is underway.
&ldquo;You&rsquo;ve got to provide basic services above all else,&rdquo; Schimmel said.
&ldquo;I&rsquo;ve closed economic development authorities. I&rsquo;ve closed all sorts of things. You&rsquo;ve got to have police, fire [and] public works. That was first.&rdquo;
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/17/03/9227950/who-is-buying-municipal-bonds">Who Is Buying Municipal Bonds?&nbsp;</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9249199/title-iii-restructuring-for-puerto-rico-likely-to-result">Title III Restructuring For Puerto Rico Likely To Result In Significant Paid Claims For Monolines</a>

Muni Bond Expert On Puerto Rico: 'It's Going To Be More Than A Haircut'

Puerto Rico&rsquo;s restructuring of $73 billion in debt &mdash; a bankruptcy four times the size of Detroit&rsquo;s &mdash; has been a long time coming, analyst Cate Long said on Benzinga&rsquo;s <a href="http://premarket.benzinga.com/pre-market-show/">PreMarket Prep</a> morning show Thursday.
The <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9249199/title-iii-restructuring-for-puerto-rico-likely-to-result">territory&rsquo;s bankruptcy</a> is not a Chapter 9 filing, as Detroit&rsquo;s was, but rather follows a law signed June 30, 2016, by former President Barack Obama that spells out a debt restructuring process for the archipelago.
The Puerto Rico Clearinghouse analyst compared Puerto Rico&rsquo;s debt stack &mdash; and the 500,000 bondholders who stand to take a haircut from it &mdash; to a cake.
&ldquo;Depending on which of those slices you own &hellip; the recovery varies,&rdquo; Long said, from as little of a recovery as 5 cents on the dollar at the bottom to 75 to 80 cents on the dollar the top.
&ldquo;There&rsquo;s going to be losses.&rdquo;
The SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), which has about a 9-percent exposure to Puerto Rican bonds, dropped slightly in value after the market open Thursday.
<h3>The Market&rsquo;s Reaction To Puerto Rico&rsquo;s Woes</h3>
Long discussed Puerto Rico&rsquo;s balance sheet with PreMarket Prep hosts Joel Elconin and Spencer Israel Thursday, including $50 billion in unfunded pension liabilities.
Other troubled states and municipalities, such as Chicago and Illinois as a whole, Philadelphia and Hartford, Connecticut, are watching Puerto Rico, Long said.
&ldquo;We have a list of bad boys. It&rsquo;s definitely going to make everybody wake up today and go back and look at their spreadsheets.&rdquo;
Wednesday&rsquo;s bankruptcy declaration may in fact bring stability by putting the matter into a federal judge&rsquo;s hands, Long said.
&ldquo;We&rsquo;ve seen this train wreck coming for months and years,&rdquo; she said. &ldquo;It was a big explosion [and] it went through the media yesterday &mdash; but it&rsquo;s also the start of a more orderly process.&rdquo;
During the Detroit bankruptcy, then-U.S. Bankruptcy Judge Steven Rhodes issued a landmark ruling that retirees&rsquo; pension checks could be reduced. The city&rsquo;s $18 billion bankruptcy rattled the historically stable <a href="https://www.benzinga.com/trading-ideas/long-ideas/17/03/9227950/who-is-buying-municipal-bonds">municipal bond market</a>.
<h3>A Tax Haven No More?</h3>
Act 22, a Puerto Rico law, allows mainland U.S. residents to move to the territory and be taxed at a rate of 4 percent, <a href="https://www.nytimes.com/2015/12/20/us/politics/puerto-rico-money-debt.html">escaping federal taxation</a>, Long said.
U.S. Sen. Orrin Hatch, a Utah Republican, &ldquo;doesn&rsquo;t like it,&rdquo; Long said of Act 22.
&ldquo;Long-term, it&rsquo;s not something I would set up a business in Puerto Rico or buy a big house based on.&rdquo;
Related Links: 
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9356383/puerto-rico-could-be-a-big-winner-from-congressional-app">Puerto Rico Could Be A Big Winner From Congressional Appropriations Battle</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9292745/puerto-rico-announces-restructuring-agreement-with-some-">Puerto Rico Announces Restructuring Agreement With Some Bondholders, But Broader Crisis Remains</a>
<h3>
How To Listen And Watch</h3>
<a href="http://premarket.benzinga.com/pre-market-show/">PreMarket Prep </a>is a daily trading ideas show with a focus on pre-market volatility and technical setups. You can listen live and chat with our hosts, guests and listeners every morning from 8&ndash;9 a.m. ET here or on <a href="https://www.youtube.com/live_dashboard">YouTube Live</a>. You can listen to the podcast on <a href="https://itunes.apple.com/us/podcast/benzingas-premarket-prep/id915782694?mt=2">iTunes</a>, <a href="http://soundcloud.com/bztv">Soundcloud</a> and <a href="http://www.stitcher.com/podcast/benzinga-morning-show">Stitcher</a>. The full recording of today&#39;s show is available below.
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Puerto Rico Goes Bankrupt: 'There's Going To Be Losses'

Congress has until midnight on Friday night to avoid a partial government shutdown by passing a spending bill to fund government operations.
While most investors are hoping to avoid the headache of a shutdown, at least <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9249199/title-iii-restructuring-for-puerto-rico-likely-to-result">one class</a> of investors may be hoping negotiations continue to be hard-fought.
According to Height Securities' Stefanie Miller, Congressional Democrats will likely be pushing to help out Puerto Rico and its bond investors. On Wednesday, President Donald Trump seemed to <a href="https://twitter.com/realDonaldTrump/status/857370270776086528">confirm this belief </a>on Twitter.
<blockquote class="twitter-tweet" data-lang="en">Democrats are trying to bail out insurance companies from disastrous <a href="https://twitter.com/hashtag/ObamaCare?src=hash">#ObamaCare</a>, and Puerto Rico with your tax dollars. Sad!
&mdash; Donald J. Trump (@realDonaldTrump) <a href="https://twitter.com/realDonaldTrump/status/857370270776086528">April 26, 2017</a></blockquote>
<script async src="//platform.twitter.com/widgets.js" charset="utf-8"></script>&ldquo;We think it&rsquo;s likely that as a part of the current FY 2017 government funding fight, Democrats can be successful in appropriating a new round of short-term financing to help Puerto Rico backstop its cash-strapped Medicaid program,&rdquo; Miller explained.
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/04/9292745/puerto-rico-announces-restructuring-agreement-with-some-">Puerto Rico Announces Restructuring Agreement With Some Bondholders, But Broader Fiscal Crisis Remains </a>
While Height says both Republicans and Democrats agree that it&#39;s in the best interest of the U.S. to avoid the worst-case scenario in Puerto Rico, there are <a href="http://www.reuters.com/article/us-puertorico-debt-bankruptcy-idUSKBN17T064?il=0">differing opinions</a> about the role the U.S. should play.
Miller believes Congress will opt for a &ldquo;kick the can&rdquo; approach in 2017 that involves another short-term cash infusion into Puerto Rico&rsquo;s Medicaid program.
&ldquo;Beginning in 2018, we think the time could be ripe for Republicans and Democrats to come together on a deal that see federal funding for Puerto Rico&rsquo;s Medicaid program calculated more equitably relative to other states, although full parity is unlikely,&rdquo; Miller concluded.
If Congress agrees to provide short-term aid, investors in the SPDR Series Trust (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), which has significant exposure to Puerto Rican municipal bonds, could get a nice bump.

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Puerto Rico Could Be A Big Winner From Congressional  Appropriations Battle

On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island&#39;s senior credits protected by a constitutional lien on revenues. -Puerto Rico Governor Alejandro Garc&iacute;a-Padilla.
On Wednesday, Garc&iacute;a-Padilla wrote an article for <a href="http://www.cnbc.com/2016/06/29/puerto-ricos-governor-warns-of-imminent-default-on-more-than-1-billion-in-debt-commentary.html">CNBC</a> explaining why the commonwealth he governs will default again on Friday. &ldquo;Puerto Rico does not have the ability to repay the $70 billion debt that was generated by past administrations and their creditors. The debt must be restructured fairly and equitably to both the people of Puerto Rico and the bondholders,&rdquo; the note explained.
<h3>How Puerto Rico Got In So Deep</h3>
Puerto Rico&rsquo;s financial crisis began years ago when its government started issuing debt seeking to cover its public spending deficit &mdash; a very common practice in emerging economies. The catch here was that the municipal bonds and other debt titles were tax-exempt (some say, triple tax-exempt) for U.S. investors and paid higher yields than most other munis. So, the bonds became very popular and easy to place.
However, as corporate tax breaks on the island expired in 2006, a lot of business fled, leaving a large portion of Puerto Rico&rsquo;s population jobless and its government dealing with more than it could handle. This led it to issue even more debt.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/news/16/06/8140107/puerto-rico-being-sued-by-hedge-funds-for-dodging-payments">Puerto Rico Being Sued By Hedge Funds For Dodging Payments</a></bzrelatedlink>
However, unlike other American cities and states, the island was not allowed to file for bankruptcy, and therefore, could not get a court order to restructure its debt. In addition, the commonwealth was not allowed to borrow from the IMF, as it was not a sovereign nation either.
To make a long story short, the island was in trouble, as it had spent even more than it had borrowed, and, thus, could not return the money, neither could it easily restructure its obligations.
<h3>What Now?</h3>
On Wednesday, Puerto Rico&rsquo;s governor said the island would go into default, yet again, stressing the need for a long-term restructuring plan that&rsquo;s fair and equitable &ldquo;to both the people of Puerto Rico and the bondholders.&rdquo; And, a restructuring could finally come&hellip;or so it seems.
Earlier on Wednesday, <a href="http://www.bloomberg.com/politics/articles/2016-06-29/puerto-rico-debt-bill-clears-biggest-remaining-hurdle-in-senate">Bloomberg</a> reported a bill that would allow the commonwealth to access some of the bankruptcy protections other U.S. states enjoy seemed close to passing &mdash; and could be approved as early as Thursday, as it had already passed the threshold it needed in the Senate. Moreover, the White House has stated that the president will sign the measure, if accepted by the Congress. Of course, a break would come with certain obligations, like spending cuts and external oversight.
<bzrelatedlink>Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/16/05/7914458/puerto-ricos-default-hurts-local-investors-the-most">Puerto Rico's Default Hurts Local Investors The Most</a></bzrelatedlink>
While Garc&iacute;a-Padilla expressed his discomfort with the oversight Congress wants to impose, arguing it would undermine the democratic Independence of the Commonwealth, he accepted it as the best choice available. Moreover, he said, whatever the Congress decides, Puerto Rico will still default on Friday.
&ldquo;The emergency measures we have taken are unsustainable, harm our economy, reduce revenues and diminish our capacity to repay our debts. Puerto Rico cannot endure any more austerity,&rdquo; he elaborated.
&ldquo;We are facing a government less capable of providing the services which the public needs,&rdquo; the governor added, making allusion to the cuts in education and healthcare that the so-called vulture funds (some hedge funds that own the debt and claim they &ldquo;should be paid before essential services&rdquo;) are asking for.
&ldquo;As governor, I will use my remaining time in office to benefit from the tools provided by PROMESA and develop a fiscal plan that is faithful to the best interests of the people of Puerto Rico,&rdquo; he concluded.
Check out Broadway star Lin-Manuel Miranda asking bondholders and the U.S. Government to help relieve Puerto Rico&rsquo;s situation&hellip;with a rap!

	&nbsp;

	<iframe allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/0Evat-L7djc" width="560"></iframe>

	&nbsp;

	Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.

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Puerto Rico's Debt Crisis: How It Happened And Why A $1 Billion Default Is Coming Friday

The October jobs report, delivered earlier Friday, was enough to spark a surge in Treasury yields. Ten-year Treasury yields are trading higher by four percent at this writing, bringing the one-month climb in yields on the benchmark U.S. government bond to 13.3 percent.

	&nbsp;

	Although fixed income ETFs have been among <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5956578/junk-bond-etfs-old-black-is-the-new-black-again">this year&#39;s most prolific asset gatherers</a> as invesors have recently piled into both investment-grade and high-yield corporate bond funds, longer duration ETFs will be vulnerable as yields in anticipation of the Federal Reserve raising interest rates next month. Municipal bond funds, previously favored destinations for income investors, are not exceptions to that rule. However, that does not mean the asset class should be abandoned outright.

	&nbsp;

	&ldquo;Municipal bond mutual funds gathered $2.8 billion in the four-week period ended October 28, according to Investment Company Institute, even as muni bond ETFs added $593 million of inflows in October. However, at a recent S&amp;P Dow Jones Indices Municipal and Global Bond Forum, various panelists highlighted the relative benefits of municipal bond ETFs,&rdquo; said <a href="http://trymsatoday.com/">S&amp;P Capital IQ</a> in a new research note.&nbsp;

	&nbsp;

	The $5.5 billion iShares National AMT-Free Muni Bond ETF (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>) has added $251.7 million in new assets during the fourth quarter while the a high-yield rival, the $407.3 million SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), has seen fourth-quarter inflows of over $51 million.

	&nbsp;

	MUB allocates a combined 78 percent of its weight to bonds rated either AAA or AA and the ETF&#39;s effective duration is 4.7 years, <a href="http://www.ishares.com/us/products/239766/MUB">according to issuer data</a>. With a yield-to-worst of 5.25 percent, HYMB allocates two-thirds of its weight to municipal bonds rated below Baa or not rated at all.&nbsp;

	&nbsp;

	Data suggest investors are better off with passive municipal bond funds, such as ETFs, than actively managed equivalents. <a href="http://www.benzinga.com/news/15/09/5829832/active-management-mediocrity-continues">http://www.benzinga.com/news/15/09/5829832/active-management-mediocrity-continues</a>

	&nbsp;

	&ldquo;J.R. Rieger, Managing Director of Fixed Income Indices for S&amp;P Dow Jones Indices, highlighted that just one-third of all active national municipal bond funds outperformed the S&amp;P Municipal Bond index in the three-year period ended June 2015. Further, just 16% of those funds that were in the top-quartile of their muni bond peer group in the 12-month period ended March 2013 retained that ranking in the subsequent period,&rdquo; said S&amp;P Capital IQ.

	&nbsp;

	Investors looking for regionally-focused muni bond ETF can consider the $188 million iShares New York AMT-Free Muni Bond ETF (NYSE: <a class="ticker" href="/stock/iyf#NYSE">IYF</a>). IYF has a 30-day SEC yield of about 1.6 percent and a duration of 4.5 years. Over 81.5 percent of its combined weight goes to bonds rated AAA or AA.

	&nbsp;

	IYF &ldquo;tracks a broad, market value-weighted S&amp;P index that seeks to measure the performance of bonds issued within New York. All the bonds inside NYF have investment-grade credit ratings. However, if you live in New York, the ETF&#39;s 1.7% 30-day SEC might look low relative to the Lipper New York Municipal Debt fund mutual fund peer group&#39;s 2.1%,&rdquo; said S&amp;P Capital IQ.

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iShares Dow Jones US Financial Sector Index Fund

iShares S&P National AMT-Free Municipal Bond Fund

Treading Carefully With Municipal Bond ETFs

The plan seeks to help restructure the country's debt by cutting $1B in operating expenses and increasing revenues $1B

Puerto Rico Draft Economic Plan Calls For Consolidating/Closing Schools, Cutting University Subsidies & Healthcare Spending; Would Eliminate Christmas Bonus And Vacation Days

On fears politicians will not reach a compromise that helps the U.S. economy dodge the dreaded fiscal cliff, some municipal bonds ETFs surged to all-time highs on Friday. On volume that was nearly 50 percent above the daily average with 30 minutes left in the session, the iShares S&amp;P National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>) was higher by 0.2 percent.

MUB, the largest municipal bond ETF with $3.44 billion in assets under management, touched a new all-time high at $114.31 earlier in today's session. That ETF, with a 30-day SEC yield of 1.5 percent, is far from alone in the new all-time high club. 

Investors have also shown a willingness to bid up high-yield municipal bond ETFs. The Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>) today traded to its highest levels since its February 2009 debut. HYD, which has over $1 billion in AUM, features a 30-day SEC yield of 4.26 percent. The Market Vectors fund has jumped 15.7 percent this year compared to a 5.6 percent gain for MUB.

The $183.7 million SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>) also touched a new all-time high today on volume that is more than 25 percent above the daily average. HYMB has a 30-day SEC yield of 4.11 percent and has delivered returns of 14.4 percent year-to-date.

The fiscal cliff would likely increase the allure of the tax advantages offered by municipal bond funds. Municipal bonds are attractive because these bonds are usually exempt from federal taxes and many are not subject to state and local taxes, either.

And it has been fears regarding the fiscal cliff that has led to inflows for municipal bond ETFs. At <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/11/3119426/fiscal-cliff-could-chase-investors-to-muni-etfs">the start of this week</a>, HYD had $994 million in AUM while the iShares S&amp;P California AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>) had above $275 million in assets. The iShares S&amp;P California AMT-Free Municipal Bond Fund's AUM total was nearly $282.2 million at the start of trading today. CMF can also be found flirting with its all-time highs.

For more on municipal bonds the fiscal cliff, click <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/11/3119426/fiscal-cliff-could-chase-investors-to-muni-etfs">here</a>.

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iShares S&P California AMT-Free Municipal Bond Fund

Muni Bond ETFs Jump to New Highs on Cliff Fears

Prized for decent yields and tax advantages, municipal bonds and the ETFs that track them could become prime destinations for income investors if the fiscal cliff becomes a reality. Fears of the fiscal cliff, the GDP-draining scenario under which old tax reductions expire and become new tax increases, have already pounded an array of sectors and ETFs.

Dividend funds, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/11/3095162/fiscal-cliff-fears-are-hammering-these-etfs">telecommunications and utilities names</a>, just to name a few, have suffered at the hands of the fiscal cliff. As one example, the Utilities Select SPDR (NYSE: <a class="ticker" href="/stock/xlu#NYSE">XLU</a>) has plunged almost 5.9 percent in the past month. Conversely, the $3.4 billion iShares S&amp;P National AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/mub#NYSE">MUB</a>) has jumped 1.3 percent.

Even with the recent bullishness, municipal bonds and the corresponding ETFs are not richly valued. 

"Not only do munis offer a significant tax advantage, but municipal bonds look cheap relative to other alternatives, particularly US Treasuries," said iShares Global Chief Investment Strategist Russ Koesterich <a href="http://isharesblog.com/blog/2012/11/26/the-calm-before-the-storm/">in a note</a>. "Over the last 30 years, the 10-year Treasury note typically yielded about 60 basis points over an index of general obligation (GO) muni bonds of a similar maturity. Today, thanks to the Federal Reserve artificially suppressing yields, the Bond Buyer 11— an index of GO munis yields – is yielding 170 basis points over Treasuries. Given the potential for more volatility, higher tax rates, and favorable spreads, I would continue advocate investors remain overweight to municipal bonds."

ETFs such as MUB, which has a 30-day SEC yield of 1.56 percent, and the $1.2 billion SPDR Nuveen Barclays Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/tfi#NYSE">TFI</a>) could see increased inflows if the fiscal cliff comes to pass. Should that happen, the dividend tax rate will rise, at the very least on those earning more than $250,000 per year. TFI's 30-day SEC yield is 1.55 percent.

That would likely increase the allure of the tax advantages offered by municipal bond funds. Municipal bonds are attractive because these bonds are usually exempt from federal taxes and many are not subject to state and local taxes, either. 

Investors have already been pouring a bit more cash into muni bond ETFs in the days since Election Day. The iShares S&amp;P California AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>) and MUB both saw inflows from November 7-13 while investors took almost $400 million out of the iShares iBoxx $ High Yield Corporate Bond Fund (NYSE: <a class="ticker" href="/stock/hyg#NYSE">HYG</a>), <a href="http://isharesblog.com/blog/2012/11/23/bond-etf-flows-favoring-safer-havens/">according to iShares</a>.

CMF, which has nearly $275 million in assets under management, also has a 30-day SEC yield of 1.56 percent. Although the ETF focuses on muni issues from financially challenged California, nearly all of the ETF's 377 holdings are rated investment-grade.

Despite concerns about municipal defaults, <a href="http://www.benzinga.com/markets/bonds/12/10/2991065/colby-bullish-on-municipal-bonds-for-rest-of-2012">a scant percentage of muni bond issues</a> actually default. That has assuaged investors and helped bolster inflows to these ETFs this year.

With that in mind, investors looking for more yield while gaining the fiscal cliff protection offered by municipal bond ETFs can consider higher-yielding fare such as the Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>). HYD, which has over $994 million in AUM, has a 30-day SEC yield of 4.3 percent and pays a monthly dividend. The fund allocates nearly 22 percent of its weight to California bonds.

Another alternative is the $182.4 million SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>). HYMB, which has a 30-day SEC yield of 4.18 percent, features an 18 allocation to California bonds.

For more on bond ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/11/3111513/beyond-treasuries-bond-etfs-for-retirees#ixzz2DMYCX5ML">here</a>.

Fiscal Cliff Could Chase Investors to Muni ETFs

Despite precarious financial positions for several large U.S. states and an increased number of municipal bankruptcies, ETFs tracking municipal bonds have been stellar performers in 2012. Jim Colby, portfolio manager and senior municipal strategist, responsible for Market Vectors municipal bond investments, expects the ebullience to continue.

"I believe the continued value proposition embedded in municipal yields — nominally higher than those of treasuries — has attracted both individual and institutional buyers," Colby said in his weekly research note on muni bonds.

Indeed, it has been a combination of high yields and relatively low default rates that have driven investors to muni bond ETFs. The Market Vectors High-Yield Municipal Index ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>), which has almost $896 million in assets under management, has surged 10.5 percent year-to-date. HYD pays a monthly dividend with a 30-day SEC yield of 4.82 percent and a trailing 12-month yield of five percent.

Other high-yield muni bond funds have gotten in on the act as well. The SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>) has jumped 9.44 percent this year. With almost $144 million in AUM, HYMB features a 30-day SEC yield of 4.53 percent.

Colby notes declining yields on muni issues have bolstered year-to-date returns and helped drive inflows. 

"Through September, municipal mutual funds and ETFs have witnessed 43 consecutive weeks of positive cash inflows," <a href="http://www.vaneck.com/Templates/Blog.aspx?id=2147490126&amp;blogid=2147483856">Colby wrote in the note</a>. 

In theory, an elevated number of municipal defaults should be having an adverse impact on muni bond ETFs, but that has not been the case. One fact that may be keeping ETFs such as HYD and HYMB steady is that default rates are still not at troublesome levels. Arguably, the default risk in the muni bond market is overstated. Colby noted in an interview earlier this year with Benzinga that muni bonds are a $3.7 trillion marketplace, but only 2% of that number trades on any given day

In that interview, he said <a href="http://www.benzinga.com/markets/bonds/12/05/2595919/muni-bond-etfs-and-retirees-a-match-made-in-heaven#ixzz297BVMYfh">"less than one half of one percent"</a> of rated bond issues default.

Even the iShares S&amp;P California AMT-Free Municipal Bond Fund (NYSE: <a class="ticker" href="/stock/cmf#NYSE">CMF</a>), which focuses on muni issues from financially-challenged California, has soared 5.2 percent this year. California issues also account for 22 percent of HYD's weight. The Market Vectors Intermediate Municipal Index ETF (NYSE: <a class="ticker" href="/stock/itm#NYSE">ITM</a>) is another example of an ETF heavy on California issues that has thrived despite the negative headlines flowing from the nation's largest state. 

ITM has trailing 12-month yield of almost three percent and has risen nearly four percent this year despite a 15 percent allocation to California.

Looking ahead, Colby's forecast is bullish, but he cautions investors that there are potential issues to be aware of.

"I believe we can expect continued good performance but with the following two caveats: (1) political risk in the form of potential changes to, or elimination of, the tax-exempt nature of municipal interest, and (2) credit deterioration resulting from weak underlying economics. Either could have an adverse impact on the market," he wrote.

For more on muni bond ETFs, click <a href="http://www.benzinga.com/markets/bonds/12/05/2595919/muni-bond-etfs-and-retirees-a-match-made-in-heaven">here</a>.

Colby Bullish On Municipal Bonds For Rest of 2012

It is not just low volume equity-based ETFs that are delivering solid and, in some cases, spectacular returns for investors. Some lightly traded bond ETFs are getting in on the act as well. A list of the 10 best equity ETFs in terms of year-to-date performance <a href="http://www.indexuniverse.com/hot-topics/14678-egpt-and-beyond-2012s-top-etfs-so-far.html?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=DailyEmailBlast">compiled by Index Universe</a> indicates that only half, or five, of the funds on that list have what many investors would deem "decent" average daily turnover.

Simply put, fixating on an ETF's average daily volume can mean <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2955946/argument-for-low-volume-etfs-gains-steam">missing out on some great returns with equity funds</a>. Importantly, that theme is not limited to the universe of equity-based ETFs.

The same can be said of bond ETFs. Traders and investors surely know about heavily traded bond funds such as the iShares iBoxx $ Invest Grade Corporate Bond ETF (NYSE: <a class="ticker" href="/stock/lqd#NYSE">LQD</a>), the SPDR Barclays Capital High Yield Bond (NYSE: <a class="ticker" href="/stock/jnk#NYSE">JNK</a>) and the PIMCO Total Return ETF (NYSE: <a class="ticker" href="/stock/bond#NYSE">BOND</a>), just to name a few.

Those are fine ETFs in their own right, but there are opportunities to be had with thinly traded bond funds just as there opportunities to be had with light volume equity ETFs. 

Take the example of the WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ: <a class="ticker" href="/stock/emcb#NASDAQ">EMCB</a>). The WisdomTree Emerging Markets Corporate Bond Fund has been one of the best new bond ETFs to come to market this year in terms of attracting assets (after BOND, of course). Following its March debut, EMCB now has almost $71 million in AUM, but its daily volume is not inspiring at less than 17,700 shares.

Focusing on the volume metric alone means investors have missed out on a gain of 5.2 percent, a current 30-day SEC yield of almost four percent and <a href="http://www.wisdomtree.com/etfs/recent-distributions-history.aspx?etfid=79">six dividend payments because EMCB pays a monthly dividend</a>. 

WisdomTree sponsors another ETF that belongs in this conversation, the WisdomTree Asia Local Debt Fund (NYSE: <a class="ticker" href="/stock/ald#NYSE">ALD</a>). Before everyone and his sister was thrilled to bits that the PIMCO Total Return ETF was the alleged savior of the actively managed ETF space, a couple of actively managed bond ETFs were thriving. They still are and ALD is one of them. 

ALD offers exposure to the sovereign debt of South Korea, Malaysia, Indonesia, Philippines, Thailand, India, China, Hong Kong, Singapore, Taiwan, Australia and New Zealand denominated in the local currencies of those nations. The fund has over $430 million in assets, but has ADV of just 34,500 shares. That has not prevened ALD from gainin almost four percent this year. 

Staying with the emerigng markets theme, the Market Vectors LatAm Aggregate Bond ETF (NYSE: <a class="ticker" href="/stock/bono#NYSE">BONO</a>) is diminutive both in terms of AUM ($7.7 million) and ADV (3,800 shares). Still, BONO has gained almost 7.7 percent this year, features a 30-day SEC yield of 5.35 percent and offers an excellent way of getting exposure to the <a href="http://www.benzinga.com/markets/bonds/12/08/2862451/play-latam-bonds-with-these-etfs">improving credit quality of some Latin American nations</a>.

Taking a look at a more domestically-focused fund, the SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>) is a great example of a low volume ETF with a decent AUM total. The 18-month-old ETF has almost $144 million in AUM despite despite ADV of less than 35,700 shares. 

Neither light volume nor an allocation in excess of 10 percent to California bonds has stood in the way of HYMB gaining almost nine percent this year. HYMB is up nearly 15 percent since its debut.

For more on low volume ETFs with sound returns, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2955946/argument-for-low-volume-etfs-gains-steam">here</a>.

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BOND

BONO

EMCB

Low Volume Bond ETFs Thriving, Too

One noteworthy trend that has been easily spotted during the evolution of the exchange-traded products business has been the proliferation of copycat or "me too" ETFs. Simply put, one ETF issuer comes to market with a fund focusing on a particular country, sector on niche and a rival issuer later follows suit with a fund that has a different, but one that essentially does the same thing as the original. 

Vanguard, the third-largest U.S. ETF sponsor with almost $208 billion in ETF assets under management at the end of April, has introduced plenty of funds that aren't much different than comparable, older iShares and SPDRs products. iShares, the world's largest ETF firm, also has a long list of first-to-market funds, but the firm has also <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/02/2310295/more-me-too-etfs-from-ishares-debut-today">encroached on territory previously occupied by its rivals</a>.

This isn't a bad thing, at least not for investors, because the proliferation of me too ETFs has been known to spark some fee reductions from the issuer of the first-to-market fund that is facing new competition. 

In one recent example <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/05/2546872/van-eck-pares-expenses-on-indonesia-etf">Van Eck's Market Vectors unit pared costs on its Market Vectors Indoneis ETF (NYSE: </a><a class="ticker" href="/stock/idx#NYSE">IDX</a>) for the second time since January 2011. The firm didn't say it, but it's not unreasonable to assume the lower expenses are at least partially attributable to existence of the iShares MSCI Indonesia Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/eido#NYSE">EIDO</a>).

Again, competition is a good thing, but even though rival ETFs keep popping up, some funds have first mover advantages that have proven to be too much to overcome or that will prove to be hard to fight in the future. Here are some noteworthy examples.

Market Vectors Agribusiness ETF (NYSE: <a class="ticker" href="/stock/moo#NYSE">MOO</a>)
In the world of agribusiness ETFs, maybe there can be only one. At least only one that focuses on the sub-sector's large-caps and that one is the Market Vectors Agribusiness ETF. Nearly five years old, MOO has seen competitors come and go while maintaining its status as the largest, most liquid agribusiness ETF. 

The iShares MSCI Global Agriculture Producers Fund (NYSE: <a class="ticker" href="/stock/vegi#NYSE">VEGI</a>) came to market in late January and is 14 basis points cheaper than MOO, but has gained little traction against its more established rival, attracting just $4.6 million in AUM. To this point, only the IndexIQ Global Agribusiness Small Cap ETF (NYSE: <a class="ticker" href="/stock/crop#NYSE">CROP</a>), more a complement to than a rival of MOO, has proven to be a worthy option beyond MOO among agribusiness funds.

iShares MSCI Philippines Investable Market Index Fund (NYSE: <a class="ticker" href="/stock/ephe#NYSE">EPHE</a>)
This isn't a commentary on the validity of the Philippines investment thesis or EPHE itself, though we'll admit <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/05/2575773/etfs-looking-for-strength-in-all-the-right-places-xly-fcg-vnm">our bullish view of the ETF has taken a hit recently, but EPHE appears to have found support at $27</a>.

Disclaimers aside, in 18 months of trading as the only Philippines-specifc ETF on the market, EPHE has amassed almost $136 million in AUM. More importantly, it is now known as the go-to Philippines ETF. Perhaps the only way a rival can hope to compete is to significantly undercut EPHE's 0.59% expense ratio.

Global X Social Media Index ETF (Nasdaq: <a class="ticker" href="/stock/socl#Nasdaq">SOCL</a>)
Surprisingly glum action on Facebook's (Nasdaq: <a class="ticker" href="/stock/fb#Nasdaq">FB</a>) first day of trading notwithstanding, SOCL's status as the first, and to this point only, social media ETF should prove durable. Being the first ETF <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/05/2598815/facebook-ipo-something-special-for-social-media-etf">that Facebook will call home won't hurt SOCL's status as the preeminent social media ETF, either</a>. 

Despite the popularity of social media and all the attention given to the Facebook IPO, ETF sponsors have shown no plans that indicate they're willing to challenge SOCL.

Market Vectors High-Yield Muni ETF (NYSE: <a class="ticker" href="/stock/hyd#NYSE">HYD</a>)
The Market Vectors High-Yield Muni ETF does have a rival in the form of the SPDR Nuveen S&amp;P High Yield Municipal Bond ETF (NYSE: <a class="ticker" href="/stock/hymb#NYSE">HYMB</a>), which debuted in April 2011. HYMB now has almost $84 million in AUM, not bad, but well short of the $605.4 million HYD has. Not to mention, HYD's 30-day SEC yield is nearly 30 basis points and its expense ratio is 10 basis points lower than the SPDR fund.

EGShares Emerging Markets Consumer ETF (NYSE: <a class="ticker" href="/stock/econ#NYSE">ECON</a>)
There were ETFs that offered exposure to the emerging markets consumer before the EGShares Emerging Markets Consumer ETF popped up in late 2010, but ECON was really the first fund to be an overt pure-play on emerging markets shoppers. As we previously noted, <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2489113/checking-in-the-other-em-consumer-etf-emdi-econ-coh">a rival to ECON has appeared, but ECON has outperformed that fund</a>. ECON also has over $400 million in AUM, a figure that could easily prove to be too much to overcome in this narrowly-focused corner of the exchange-traded marketplace.

Sector ETFs

Technicals

Commodities

CROP

Emerging Global Shares Dow Jones Emerging Marketsnsumer Titan Index Fund

ECON

iShares MSCI Indonesia Investable Market Index Fund

EIDO

ISHARES MSCI PHILIPPINES INVESTABLE MARKET INDEX FUND