Expert Who Helped Craft PROMESA Act: President Trump Is Right, Bondholders Could Lose Everything

When President Donald Trump proclaimed that Puerto Rico's debt may have to be forgiven, it was dismissed by some Wall Street observers. But now a UN sovereign debt consultant who helped shape the “PROMESA act” that gave Puerto Rico super bankruptcy status says debt forgiveness for the island is the likely outcome.

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When President Trump mentioned the concept that Puerto Rico's debt might have to be “wiped out,” it was dismissed as an “offhand” remark this morning. “The President can’t wave his hand and say we’re going to ignore all that and go in another direction,” Steve Rattner of Willett Advisors told Bloomberg TV. He said that Congressional action might be needed to wipe out the debt.

But that isn’t how...