Over the past week, the Trump Administration has suffered from criticism concerning its aid response towards the U.S territory of Puerto Rico. Recovering after Hurricane Maria storm on September 20th, the small island has reached a death toll of 34, with 93% of the island without food, water and medical attention.

Much of the criticism against President Trump's relief efforts are founded on, what critics say, the delayed aid response for the island. Former first lady Hillary Clinton lambasted the lack of response by the U.S armed service, stating that the President should send the Navy to Puerto Rico, because "these are American citizens." A few days later, President Trump officially held a meeting in the Situation Room regarding aid efforts to Puerto Rico. Since then, U.S efforts have included supply-distribution centers for food and water, military personnel and the hospital ship USNS Comfort.

While Puerto Rico recovers from the devastating effects from Hurricane Maria, discussion concerning its $74 billion debt has risen to the surface. In an interview, President Trump addressed the looming debt over the island, stating that America has "to look at their whole debt structure. They owe a lot of money to [our] friends on Wall Street. We're going to have to wipe that out." A day later, two weeks after the landfall of Hurricane Maria, the President visited the island's capital San Juan. There, the Commander in Chief reportedly threw paper towels out to the crowd. In response, the mayor of San Juan called the President's actions "terrible and abominable."

© The National Guard / Flickr.com

Although the island is facing months of recovery, the remarks made by the President outline the reality surrounding the origin of Puerto Rico's debt. Approximately 75% of the debt in Puerto Rico is owed to American investors, while the rest belongs to hedge funds. The origin of the debt arises from the investments of everyday Americans, who bought parts of the Puerto Rican debt to offset the financial recession plaguing the island for 11 years. In doing so, Puerto Rico has paid high interest rates to American bond investors. Given that the island's debt is tax exempt, the American bond owners do not pay federal, state or local taxes on the interest accrued. Today, about 850 bond funds, or funds that invest in Puerto Rico's government owed debts, are in control of the island's debt. Some bond owners include Goldman Sachs (GS  ) and BlackRock (BLK  ).

In response President Trump's comment, who suggested that America would have to get rid of the debt, the $3.8 trillion Puerto Rico bond market plunged. Bonds decreased to just 37 cents to the dollar from the 57 cents that it traded at the month before. Quickly after the President's remarks, White House press secretary Sarah Huckabee Sanders stated that there will be a fixed bankruptcy process to deal with Puerto Rico's debt instead. According to Sanders, the island "will have to It will have to go through that process to have a lasting recovery and growth. This is a process that was put in place and set up under Obama." Nevertheless, Puerto Rico may face future issues regarding its bankruptcy payments given Hurricane Maria's devastating effects.