Seth Klarman Image by Getty Images

Billionaire investor Seth Klarman on Wednesday resisted calls for Puerto Rico’s debt to be wiped out and said the island’s residents will be better off in the long run if obligations are honored.

Klarman comments came in an email to investors, offering fresh details about how his $30 billion hedge fund Baupost Group sees its bet on Puerto Rican bonds after Hurricane Maria, which largely destroyed the island’s infrastructure.

“In the case of Puerto Rico, expunging the debt would almost certainly eliminate any ability the Commonwealth would have to borrow money in the future at reasonable rates, which will be critical to the island’s rebuilding efforts,” Klarman wrote in the email seen by Reuters.

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Baupost is one of many Wall Street firms that stands to potentially lose money on investments in Puerto Rican real estate and debt as the U.S. territory struggles to rebuild.

Calls to forgive Puerto Rico’s more than $70 billion in outstanding obligations have mounted in recent weeks, as much of the island still has no electricity or running water.

But in his email, Klarman contended that wiping out the debt would hurt residents by undermining Puerto Rico’s ability to access credit markets.

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