Who really has exposure to Puerto Rican bonds? Chances are, you do.
President Donald Trump singled out Wall Street in his comments on the island's debt on Tuesday. Yet it's individual investors who own most of these investments.
Only about 25 percent of Puerto Rican debt is held by hedge funds, according to Cate Long, founder of Puerto Rico Clearinghouse, a provider of research and analysis on legal and legislative efforts to restructure the island's municipal debt.
Long said there are more than 500,000 individual bondholders and likely hundreds of thousands more investors with small exposure through mutual funds. "It's mainly held in the retail sector," she said.
Retail investors have piled into Puerto Rico bonds in the past decade as they searched for investments promising higher yields. The bonds also held another lure: They are triple-tax free, meaning the interest earned on them generally is free of federal, state or local taxes.
Now, Trump is calling for the island's $70 billion debt to be wiped out, according to an interview he gave Fox on Tuesday.
"They owe a lot of money to your friends on Wall Street and we're going to have to wipe that out," Trump said 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."