President Donald Trump’s visit to Puerto Rico some two weeks after the US territory was devastated by Hurricane Maria was widely criticized for its lack of empathy and sensitivity.
The president joked about Puerto Ricans not needing flashlights anymore while most of the island’s 3.4 million US citizens remain without power. While visiting a relief center, Trump casually threw paper towels at residents in need in a basketball-like motion.
Contrast that tone-deaf reaction with this stunning Bloomberg television interview with Dan Fuss, the vice chairman of the $ 13.5 billion Loomis Sayles Bond Fund, which actually owns Puerto Rican bonds in its portfolio.
Pressed by the anchors on the need for a debt “haircut” or reduction of principal paid to bondholders, Fuss simply said: “I agree with that.”
“They’ve had a disaster on top of a very very weak economy,” Fuss said, which makes this not the right time to think about timely debt repayment in the first place. “You have to think of Puerto Rico and the people.”
Even before Hurricane Maria, Puerto Rico’s economy had already been suffering from 11 years of recession and a debt crisis that culminated in the largest municipal bankruptcy in history. The territory’s unemployment rate of 10.1% is more than twice the national average.
In this context, Fuss continued, emphasizing the human cost of the island’s economic struggles and the storms:
“I would encourage everybody involved to look at the reality as it is. These poor people have enough to worry about. They are US citizens. We are US citizens — I get emotional on this — we have an obligation to help.
“Do we own bonds? Yes. Will they someday have value? I think so. But they won’t have value if we don’t bring strength and prosperity to Puerto Rico and that’s reality. You need more economic strength in Puerto Rico, and you need more jobs that pay well.”
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