Moody's puts Puerto Rico on review for downgrade
SAN FRANCISCO Dec 11 (Reuters) - Citing Puerto Rico's weak finances and economy, Moody's Investors Service put the commonwealth's general obligation rating of Baa3, the company's lowest investment grade rating, on review for downgrade on Wednesday.
Moody's also placed ratings capped by or linked to Puerto Rico's general obligation rating on review, including the Puerto Rico Sales Tax Financing Corporation's senior and junior lien bonds.
The moves affect approximately $52 billion of rated debt, the rating agency said in a statement.
Moody's said it is concerned about Puerto Rico's "weakening liquidity, increasing reliance on external short-term debt, and constrained market access, within the context of a weakened and now sluggish economy."
"These developments exacerbate the longstanding financial strain brought by the commonwealth's very high debt load and pension obligations, as well as its chronic budget deficits," Moody's said.
A major issuer of municipal bonds, Puerto Rico has been in or near recession for eight years. It has suffered from a loss of U.S. federal government economic support, spending cuts by its own government, high oil prices and population decline.
In a joint statement, Treasury Secretary of Puerto Rico Melba Acosta Febo and Chairman of the Government Development Bank for Puerto Rico David Chafey said the commonwealth "continues its focus on creating sustainable economic growth through job creation, making ongoing progress towards our goal of a structural budget balance by fiscal 2016, and strengthening our credit profile, market access and liquidity."
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