Trump to forgive all of Puerto Rico's debt??? (can he even do that?)

[pbrower2a]

All that the federal government can do about the public debt of Puerto Rico is to assume it. That will take an Act of Congress. Federal legislation.

There is a precedent in the assumption of the federal government in the annexation of Texas, until then an independent republic.

[pbrower2a]

The federal government can offer to buy the debt, offering a premium over the market value. Most bond-holders would rather cut their losses rather than risk a default which the federal government cannot guarantee to prevent. 

[pbrower2a]

The federal government can offer to buy the debt, offering a premium over the market value. Most bond-holders would rather cut their losses rather than risk a default which the federal government cannot guarantee to prevent. 

Considering the status of Puerto Rican debt that premium would still likely be below par value, but again if there's a default you don't even get that

That's the idea. Lots of people would rather sell their junk bonds (many of which were purchased at bargain-basement prices) than gamble that those bonds return to face value.