UPDATE 1-S&P puts negative outlook on $1.1 bln Puerto Rico bonds
Sept 6 (Reuters) - Standard & Poor's Ratings Service on Thursday revised from stable to negative its credit outlook for about $1.1 billion of bonds issued by the Puerto Rico Municipal Finance Agency.
S&P, which reaffirmed its BBB-minus rating on the debt, said the local-government and commonwealth revenue pledged to pay off the bonds may prove vulnerable to shifts in the Caribbean island's economy, according to a news release.
"While revenue from local property tax collections has produced adequate coverage of annual debt service, the negative outlook reflects our view that the maintenance of coverage levels consistent with historical levels requires the inclusion of appropriations from the commonwealth," S&P said.
The Wall Street credit group said its negative outlook was partly based on its assessment of the pledged revenues by Puerto Rico, where the economy is only now appears to be stepping out of a six-year recession.
Specifically, S&P said it worried about "the presence of economically shallow participating municipalities, whose individual tax bases may exhibit vulnerability during economic cycles; and the vulnerability of matching fund revenues, the appropriation of which could be affected by a downturn in the collection of the commonwealth's general revenues."
In July, S&P said it had revised to negative from stable its outlook on $2.9 billion of Puerto Rico senior pension funding bonds and Moody's Investors Service cut its ratings on $16 billion of Puerto Rico sales-tax debt.
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