Trump Vows to Wipe Out Puerto Rico’s Debt. Can He Do That?
I don’t know if it’s Goldman Sachs, but whoever it is, you can wave goodbye to that.”
If Mr. Trump meant the federal government would work to help Puerto Rico have the debt forgiven,
that could result in major losses for investors large and small.
In an interview with Fox News, Mr. Trump said his administration would help Puerto Rico wipe out
the debt to help it recover from the extensive damage left by Hurricane Maria two weeks ago.
One said it was not clear how seriously they should take the remarks, citing promises like Mr. Trump’s so-far-unsuccessful
pledge to end the Affordable Care Act, the health care plan passed under President Barack Obama.
Most of Puerto Rico’s debt is in the form of municipal bonds, a type of debt governed primarily
by state laws — or territorial laws, in Puerto Rico’s case — not by the federal government.
“We have to look at their whole debt structure,” he told Geraldo Rivera, a Fox News correspondent, on “Hannity.”
“You know, they owe a lot of money to your friends on Wall Street, and we’re going to have to wipe that out.
And despite the reference to Goldman Sachs, Puerto Rico’s debt is held by a diverse universe of investors, including big hedge funds
and middle-class Puerto Ricans who thought it would make a safe retirement nest egg.