The American Investor
Senior Member

Thanks for your message. I also hope there will not be a bond default but wish the developer had taken more affirmative steps (i.e. granting of concessions) to ensure this risk is minimized. As for your point on the unitholders being able to take possession of their units and the building without any liens in the case of a bondholder default...I do not agree. Please refer to the indenture and you will see that the building is pledged as collateral for the repayment of the indebtedness. It simply doesn't disappear upon purchases being completed. If it were otherwise, the developer would be able to sell every unit for $1 to "friends and family" and then leave the bondholders with nothing. This isn't a question of the US vs Panama but of the rules of finance.

I think your concern about a bond default is probably overstated. First, I don't think there will be a bond default. I think enough people will close that the bonds will get paid off. But more importantly, I do not believe that in the event of a bond default, you will lose your condo. Once you close, you own the condo and it is not subject to foreclosure by the bondholders, at least that is the way it works in the states. You get your unit free and clear of all liens, including any liens of bondholders. If you are on the fence, I suggest a quick trip to PC to check out the project. I went down several weeks ago and toured the building. I was very impressed and think this will be a great project when everything is completed. But of course that will take time. However, I hadn't been to PC in about 2 years and was very impressed with the changes that were made in the interim. Always a pleasure to exchange ideas. Good luck with whatever you decide.