(Bloomberg) -- Puerto Rico's debt hit a record low Wednesday after President Donald Trump suggested that the island's debt may have to be erased after Hurricane Maria's devastation.
A Puerto Rico benchmark bond saw $5 million trade at a new all-time low price of 32 cents on the dollar Wednesday morning from 44 cents the prior day, following Trump's comments last night about wiping out the island's obligations.
Trump's comments Tuesday came after he visited the island, which is contending with a humanitarian crisis made worse by its overwhelming debt load. Puerto Rico owes more than $74 billion and sought a form of bankruptcy protection this year to restructure its obligations.
"We are going to work something out. We have to look at their whole debt structure,” Trump said in an interview with Fox News. “They owe a lot of money to your friends on Wall Street. We're gonna have to wipe that out. That's gonna have to be -- you know, you can say goodbye to that. I don't know if it's Goldman Sachs, but whoever it is, you can wave good-bye to that.”
Trump's budget chief on Wednesday said not to take the president's suggestion literally.
The general-obligation bond, originally issued in 2014 and due in 2035 (callable in 2020) is one of Puerto Rico's most actively traded securities over the past week. Before Hurricane Maria, the bond was trading an average of 58.8 cents on the dollar in mid-September, according to trade prices reported by the MSRB.
Spokespeople representing a group of some general-obligation bondholders and some sales-tax bondholders declined to comment on the president's remarks. Representatives of other creditor groups didn't immediately respond to requests for comments.
To contact the reporters on this story: Danielle Moran in New York at dmoran21@bloomberg.net, Rebecca Spalding in New York at rspalding@bloomberg.net.
To contact the editors responsible for this story: Christopher Maloney at cmaloney16@bloomberg.net, Stephen Merelman
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