Moody's cut Puerto Rico rating two notches to BAA3

SAN JUAN Thu Dec 13, 2012 3:41pm EST

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SAN JUAN Dec 13 (Reuters) - Moody's Investors Service on Thursday cut Puerto Rico's credit rating by two notches to Baa3 from Baa1, with a negative outlook, the head of the Government Development Bank said.

No one was immediately available at Moody's to comment on the statement by GDB President Juan Carlos Batlle.

According to the GDB, Moody's said Puerto Rico has stabilized recently for the first time since 2006, but continues to be weak "and unable to absorb much more pressure." It also said it did not have a clear idea as to when and how the government would resolve problems of its workers retirement systems, which have a combined $36.3 billion unfunded liability.

The bank acts as the government's financial adviser and undertakes bond and other transactions on behalf of Puerto Rico's government agencies, public corporations and town governments, providing financial oversight for them.

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