Moody's, which placed Puerto Rico's rating on
notice for a downgrade late last year, said it now rates the
commonwealth's general obligation bonds at Ba2, two notches
below investment grade status.
With some $70 billion of tax-free debt, Puerto Rico has long
struggled with recession and has for months been under threat of
a ratings downgrade to junk-bond territory by all three U.S.
credit ratings agencies. Standard & Poor's cut the island's
rating to junk on Tuesday.
Moody's said Puerto Rico's economic malaise, underfunded pension
obligations and high deficit "have now put the commonwealth in a
position where its debt load and fixed costs are high, its
liquidity is narrow, and its market access has become
Moody's also cut its ratings on the island's sales-tax supported
senior lien COFINA bonds to Baa1 from A2.
(Reporting by Steven C. Johnson;
editing by Chizu Nomiyama)
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