Wood pellets are made to be burned. It turns out a Louisiana facility that was built to make the pieces for power plants is doing the same to municipal-bond investors.
Invesco Ltd., Waddell & Reed Financial Inc. and AllianceBernstein Holding LP are among buyers left in limbo after Louisiana Pellets Inc., a subsidiary of the worlds biggest pellet maker in Germany, filed for Chapter 11 bankruptcy last month. After selling almost $300 million in municipal debt since 2013, it defaulted on some taxable bonds on Jan. 1 because its facility in a small lumber town struggled to ramp up output to the levels projected in initial offering documents.
The project is the latest example of the risks associated with chasing yield in the portion of the $3….
Read the full article at: http://www.bloomberg.com/news/articles/2016-03-28/muni-bond-funds-burned-chasing-yield-with-wood-pellet-bankruptcy