NEW YORK Feb 4 (Reuters) - Some Puerto Rico municipal bond yields rose above 10 percent on Tuesday after Standard & Poor's Ratings Services cut the commonwealth's credit rating to junk.
A Puerto Rico general obligation refunding bond maturing in 2036 hit a yield of 10.16 percent shortly after S&P downgraded the cash-strapped territory's credit rating, from 9.66 percent earlier in the day.
The iShares U.S. Municipal Bond exchange-traded fund dropped about half a percent after the downgrade.
One market participant said the cut to BB+, one level below investment grade, was a surprise because it came so soon after S&P had put the Caribbean island on notice for a downgrade.
"It's a little late in the day to see what the true impact is going to be," said Gary Pollack, head of fixed income trading at Deutsche Bank in New York.