S&P says slow pension reforms in Puerto Rico risk downgrades

Fri Nov 9, 2012 11:20am EST

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Nov 9 (Reuters) - Standard & Poor's Ratings Service on Friday said "prolonged inaction" on reforms of Puerto Rico's ailing government workers pension system by the island's governor-elect could lead to a one-notch downgrade of Puerto Rico credit ratings.

The Wall Street credit agency said Tuesday's election, during which Alejandro Garcia Padilla narrowly beat Gov. Luis Fortuno, may prove crucial to Puerto Rico's rating, according to a news release. No immediate ratings action was seen, S&P said.

"However, we still believe that there is at least a one in three chance that we may lower these ratings later this year or in early 2013," S&P said.

S&P rates the island's general obligation debt BBB and its appropriation debt BBB minus and has negative outlooks on both types of debt.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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