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Ripple effect of Puerto Rico's debt crisis: Lebenthal

Puerto Rico's debt crisis will have a ripple effect on the municipal bond market, but it will not spark a contagion, muni bond expert Alexandra Lebenthal said Monday.

The governor of Puerto Rico said in a New York Times interview published Sunday that its roughly $72 billion in debts was not payable.

"There is no other option. I would love to have an easier option. This is not politics; this is math," Gov. Alejandro García Padilla told the paper.

Lebenthal, president and CEO of Lebenthal Holdings, said that half of municipal bond funds own Puerto Rico bonds.

"There already have been declines as this crisis has continued," she said in an interview with CNBC's "Power Lunch."

"This could have the effect, and I do expect it will have the effect, of causing some issues in the rest of the market."

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However, Lebenthal pointed out that the situation on the cash-strapped island is unique and therefore shouldn't contaminate the overall tax-free municipal bond market.

"You have a massive amount of debt and if you look at the per capita debt or debt versus GDP of Puerto Rico, it's staggering versus the other states," she explained. "You have unemployment that is twice that of the mainland. You have a structural imbalance in the government … that's gone on for years. So I don't see a contagion spreading."

As for those who are holders on insured bonds, they will continue to get paid interest and principal on time, she added.

Garcia Padilla is expected to make an address on the matter late Monday. He hopes to defer debt payments while negotiating with creditors.

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—The Associated Press contributed to this report.