NEW YORK (Reuters) - The price of Puerto Rico’s benchmark general obligation bonds tumbled to a record low on Wednesday after U.S. President Donald Trump suggested late on Tuesday the island’s massive debt load will have to be wiped out due to devastation caused by Hurricane Maria.

U.S. President Donald Trump, flying aboard the Marine One helicopter, makes an aerial tour of hurricane Maria storm damage around San Juan, Puerto Rico, U.S. October 3, 2017. REUTERS/Jonathan Ernst

The bond due in July 2035, the island’s most recent benchmark debt issue, dropped by 12 cents to 32 cents on the dollar early on Wednesday. Trading volumes jumped following Trump’s comments and prices fell as low as 30.25 cents.

White House Budget Director Mick Mulvaney backed away from Trump’s comments early on Wednesday. Trump was referring to Puerto Rico’s need to fix its own debt issues through its oversight board, Mulvaney said in an interview on CNN.

“I wouldn’t take it word for word,” Mulvaney said of Trump’s comments.

Puerto Rico in May filed a form of bankruptcy under the federal 2016 rescue law known as PROMESA. The island’s capital structure has 18 public agencies owing a combined $120 billion in bond and pension debt.

“They owe a lot of money to your friends on Wall Street and we’re going to have to wipe that out,” Trump said in an interview with Fox News late on Tuesday after he toured the island.

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The 2035 bond has tumbled by more than 25 cents on the dollar since Hurricane Maria devastated the U.S. territory last month.

The bonds are thinly traded given they are in default, and behave more like an equity as no change in yield accompanies their price movements. They carry a coupon of 8 percent.

Hurricane Maria knocked out power to the island’s 3.4 million residents, devastating the already dilapidated electric power infrastructure. The Puerto Rico Electric Power Authority declared bankruptcy under PROMESA in July.

“We are going to get the electric going again. You know, that was a complete wipeout,” Trump told Fox.

PROMESA

Last year, in a rare show of bipartisanship, the U.S. Congress passed the PROMESA law that created the Financial Oversight and Management Board to help the island negotiate with creditors.

The law also created a mechanism known as Title III that allowed U.S. territories such as Puerto Rico to enter a form of bankruptcy, a financial tool the island did not have access to previously.

“The status of the bonds that you heard the president mention this morning are actually inside the bounds of the PROMESA proceedings right now,” Mulvaney said.

“So those bonds are being dealt with, were being dealt with before the storm, will be dealt with after the storm through the PROMESA process,” he added.

Puerto Rico’s governor, Ricardo Rossello, said in a news briefing that he was concerned with actions, not words, and with getting Puerto Ricans what they need.

“As far as the comment made about wiping the debt clean, that is the opinion of the president,” Rossello said, adding he could not comment because of the Title III judicial proceedings.