’Just Ugly’

“They assumed a risk, they bought bonds at bottom dollar and so now it’s just ugly,” said Mark-Viverito, 46, who was born and raised in San Juan and represents East Harlem.

The hedge funds “are not offering any recommendations about what they can do except being obstructionist in every which way,” she said. “Investors need to share in the hardship to restore the island’s finances.”

Mark-Viverito didn’t call for divestment of city pension assets from such funds, though she said in an interview that she would consider it. She doesn’t have direct power to do anything because, unlike the mayor and comptroller, the City Council doesn’t have representatives on union pension boards.

Stringer, who as comptroller acts as investment adviser to the pensions and has a representative on their boards, would be “exploring all options, including divestment,” said his spokesman, Eric Sumberg.

Weighing Returns

Amy Spitalnick, a de Blasio spokeswoman, said the administration would have to weigh the hedge funds’ impact on Puerto Rico’s fiscal constraints against the opportunity for positive returns on retiree investments.

“The administration is working with our fellow trustees to engage our investment managers and better understand their roles as it relates to the current situation in Puerto Rico and our pension investments,” Spitalnick said. “It is imperative for trustees to understand the risks in their investment portfolios.”

De Blasio’s speech at the City Hall rally focused on pushing Congress to pass a law allowing Puerto Rico’s agencies to declare bankruptcy, which would give them the ability to cut their debts in court.

Some investment firms that hold bonds sold by Puerto Rico’s electric utility have lobbied against the effort. Permitting such protection would erode investor confidence in the $3.6 trillion municipal-debt market, said Stephen Spencer, a managing director at Houlihan Lokey, who’s advising creditors of the power company. That’s because investors bought commonwealth securities with the assurance that they were protected against the risk of bankruptcy, he said.