Mutual funds lost as much as $5.4 billion on their bond investments in Puerto Rico, according to an analysis by The Wall Street Journal.

“Two companies, Franklin and Oppenheimer, hold most of the mutual-fund debt,” according to Morningstar data cited by the WSJ. “Oppenheimer’s paper and actual losses are as much as $2.1 billion, and Franklin’s are as much as $1.6 billion … Franklin has $741 billion in assets under management, while Oppenheimer has $230 billion.”

Puerto Rico, a U.S. commonwealth with about 3.4 million people, half of whom live in poverty, is groaning under the weight of $74 billion of junk-rated debt. Mutual funds bought billions of dollars of the Caribbean island’s bonds because they paid high interest rates and were exempt from local, state and federal taxes in the U.S.

“When Puerto Rico last tapped the bond market in March 2014, offering 8 percent interest, underwriters were flooded with orders from hedge funds and mutual funds for the junk-rated debt,” the WSJ said, citing Morningstar data. “Twenty mutual-fund families bought a combined $263 million that quarter.”

Mutual funds that loaded up on Puerto Rico’s government debt are lagging their benchmarks.

“The damage done to mutual-fund bets is one reason why a court-supervised restructuring of Puerto Rico’s debt that starts this week with a hearing in San Juan is expected to become such a lengthy battle,” the WSJ says. “A diverse group of creditors will be competing for a limited pot of money, and allocating Puerto Rico’s resources will be complex because of the competing interests at stake.”

The government spent the money on infrastructure projects like a commuter train that doesn’t have enough riders, Bloomberg News reported.

“The Tren Urbano is a monument to the folly, bloat and abuse that finally bankrupted Puerto Rico,” Bloomberg News said. “Despite years of planning, it sells only a third of the rides it needs to, and loses roughly $50 million a year. The cost so far: $2.25 billion, $1 billion more than planned.”

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