Oct 5, 2017

Puerto Rico's bonds in the balance

Dan Primack, author of Pro Rata

The White House is sending out mixed signals on how it wants to handle Puerto Rico's $74 billion in municipal debt, which has become an even more pressing issue in the aftermath of Hurricane Maria. And the confusion pushed Puerto Rico benchmark bond prices even lower.

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Data: S&P Dow Jones Indices; Chart: Andrew Witherspoon / Axios
  • President Trump on Tuesday to Fox News: "You know, they owe a lot of money to your friends on Wall Street, and we're going to have to wipe that out. You can say goodbye to that."
  • White House OMB Director Mick Mulvaney on Wednesday to Bloomberg: "We are not going to pay off those debts. We are not going to bail out those bondholders."

Why it matters: Puerto Rico officials have said the government could shut down at the end of October if Congress doesn't provide billions of dollars in emergency funding. But the long-term recovery needs would be much different were Puerto Rico's debt to be wiped out, as Trump initially suggested.

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