While Greece dominates the headlines it’s more commentary on sentiment than material threat to the financial system. Why? – 80% of Greece’s debts are owned by the European Central bank and the International Monetary Fund. When you’re a quasi-governmental organization you can absorb lots of body blows.

Puerto Rico, the U.S. territory dealing with its own financial stresses, represents a much different situation. Why? – 80% of its debts are held by muni bond funds owned by individual investors.

Puerto Rico has asked for Congress’ permission to declare bankruptcy. If approved it would provide for the re-organization of debt a la Detroit.

Exposure to Puerto Rican debt cuts a wide swath. On the high end there’s the SPDR Nuveen S&P High Yield Muni Bond ETF which has 14% of assets in Puerto Rican bonds. On the other end of the spectrum is the MarketVectors High Yield Muni Bond ETF weighing in at 3.2% of assets. Proof positive that one needs to peel back the layers of the onion.

And as for judging a book by its cover? If you’re an investor in the Oppenheimer Rochester New Jersey Municipal Fund you’re safe, right? Wrong! The fund has 29% of its assets in Puerto Rican bonds.