It's unlikely the self-proclaimed "King of Debt" can wave away Puerto Rico's debts, but President Donald Trump's interest in the island's recovery may mean bondholders get an even smaller piece of the pie.
"The president can't just wipe out the debt," said Jeff Lipton, managing director, head of municipal research and strategy at Oppenheimer.
After visiting the devastated island, Trump said Tuesday that Puerto Rico's debt should be wiped away.
"They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out," Trump told Fox without specifying details. "You're going to say goodbye to that, I don't know if it's Goldman Sachs, but whoever it is you can wave goodbye to that."
Lipton said the president doesn't have the power to wipe it out. "To my knowledge he cannot issue an executive order even though Puerto Rico is a United States territory," he said.
Puerto Rico's bonds sold off sharply Wednesday in reaction to Trump's comment. The benchmark general obligation bonds were trading at 36 cents on the dollar, down 8 cents from Tuesday and 20 cents from a week ago.
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