effrey Gundlach, chief executive of investment firm DoubleLine Capital, said Puerto Rico municipal bonds represent about 1 percent of his DoubleLine closed-end fund.
In an investor call on Tuesday, Gundlach said Puerto Rico is not a “big bet” for the $2.2 billion DoubleLine Income Solutions Fund. Puerto Rico bonds, which carry triple-tax free status, have traded at distressed levels for more than a year amid speculation the commonwealth and its agencies will not be able to repay some $70 billion of debt.
Gundlach said he expects Puerto Rico general obligation bonds will experience volatility but investors will likely be paid back at par. He also doesn’t count out a restructuring process with investors paid back at a “very high price,” though the restructuring is not DoubleLine’s base case, he said.