Puerto Rico Is Outlier for Wealthy Fleeing Tax Hit: Muni Credit

Financial advisers to some of the wealthiest Americans see struggling Puerto Rico as an outlier in the $3.7 trillion local-debt market, leading them to add municipal bonds as the steepest federal tax rates in more than a decade loom.

Puerto Rico’s downgrade to junk this month influences investors nationwide as the U.S. commonwealth’s debt is held in 70 percent of municipal mutual funds. Money managers for high-net-worth clients say they’re more focused on the improving fiscal outlook for mainland issuers. States and cities benefiting from a growing economy are mending their finances almost five years after the longest recession since the 1930s.