Unless you're a professional investor, avoid Puerto Rico's municipal bonds, financial planners advise. Otherwise, you could face a protracted default process rivaling Greece's.

Already, investors have withdrawn hundreds of millions of dollars from mutual funds holding Puerto Rican munis, according to Lipper Inc., a unit of Thomson Reuters, citing the first five months of 2015.

And that was before Monday, when Gov. Alejandro Garcia Padilla admitted that the commonwealth can't repay more than $70 billion in debt.

"Governor Padilla reversed himself from earlier commitments" to make good on bond payments, says local money manager David Kotok, of Cumberland Advisors in Vineland, who holds some Puerto Rico bonds.

"Did Padilla take notes from watching his colleagues in Greece six thousand miles away?" Kotok asks. "It's a question without an answer."

For retail investors, it's a danger zone.

"I have five analysts working on this. It's easier for us to understand what's going on, but retail investors should avoid this," Kotok says.

Jonathan Smith, of DT Investment Partners in Chadds Ford, agrees. "If you need to live off of your assets, avoid mutual funds with Puerto Rico bonds in them," he says.

If you already own them, "get out now and quickly," advises Smith, whose firm oversees $1 billion in assets.

Latino business and political leaders here contend that the brain drain of thousands of Puerto Ricans, many of them young people, contributed to its problems. Opportunities are greater in cities on the mainland.

About four million Puerto Ricans live in the continental United States. And 50 percent of the growth in Latinos in the Philadelphia region came as Puerto Ricans moved here in the last 10 years, says former City Councilman Angel Ortiz.

But Padilla's threat to default doesn't help the island's underlying economy.

"Puerto Rico is now a fully owned subsidiary of Wall Street," Ortiz says.

"I'm terribly concerned," says Philadelphia physician Carmen Febo. "I have a sister that has been having issues finding employment. With this crisis, who knows how this will affect interest rates and savings. It's horrible."

Born in Puerto Rico, Febo moved here in the 1970s for her residency at Hahnemann Hospital and is now executive director of Taller Puertorriqueno, an arts organization in North Philadelphia.

"Unlike [with] Detroit and Chicago, the White House wants to be Pontius Pilate and wash their hands of this mess," she says.

Philadelphia's boom in Latino immigrants has, however, helped the local economy.

In its first "State of Latino Business in the Philadelphia Region" report, the Greater Philadelphia Hispanic Chamber of Commerce and Temple University's Fox School of Business found that the number of Hispanic-owned businesses had grown 28 percent, to 18,787, in less than a decade.

These businesses are located across 11 counties in the region, according to Varsovia Fernandez, head of the Chamber.


215-854-2808 @erinarvedlund