In a bizarre moment on Tuesday, President Donald Trump told Fox News that he was “gonna have to wipe out” Puerto Rico’s debt.
The exchange sent Puerto Rico general obligation bonds into a tailspin, with bonds maturing in 2035 dropping over 13% to $0.38 on the dollar, according to Bloomberg data.
“I wouldn’t start to guess with Trump,” John Mousseau, director of fixed income at Cumberland Advisors told Yahoo Finance. “The pace of rebuilding efforts will tell a lot.”
With an impetuous president often hazy on policy and details, many professionals like Mousseau have hesitated and remained calm in the face of wild, head-scratching statements.
“We take these comments as an unclear off-the-cuff response with little merit,” wrote Shaun Burgess, a fixed-income analyst for Cumberland in a note.