Seth Klarman Resists Efforts To Write Down Puerto Rico Debt
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.
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.
I hope you appreciated this article. Before you go, I’d like to ask you to please support the Forward’s award-winning, nonprofit journalism during this critical time.
Now more than ever, American Jews need independent news they can trust, with reporting driven by truth, not ideology. We serve you, not any ideological agenda.
At a time when other newsrooms are closing or cutting back, the Forward has removed its paywall and invested additional resources to report on the ground from Israel and around the U.S. on the impact of the war, rising antisemitism and the protests on college campuses.
Readers like you make it all possible. Support our work by becoming a Forward Member and connect with our journalism and your community.
Make a gift of any size and become a Forward member today. You’ll support our mission to tell the American Jewish story fully and fairly.
— Rachel Fishman Feddersen, Publisher and CEO
Join our mission to tell the Jewish story fully and fairly.