June 18 Standard & Poor's Ratings Services lowered its rating on Puerto Rico Electric Power Authority's (PREPA) power revenue bonds to "BBB-" from "BBB", citing a risk that the Government Development Bank (GDB) may not provide interim liquidity to the authority.
"(There is a) risk that the GDB will not provide interim liquidity if PREPA does not renew its lines of credit, which it uses to purchase oil," Standard & Poor's credit analyst Judith Waite said. (bit.ly/1nPxDQJ)
The GDB could have to provide liquidity if the cash-strapped authority is unable to extend or replace its maturing lines of credit.
PREPA has $8.6 billion of power revenue bonds outstanding, S&P said.
S&P also placed the authority's rating on CreditWatch with negative implications, pending the outcome of its negotiations with banks with which it has outstanding lines of credit.
Fitch Ratings last week downgraded its rating on the authority to "BB" from "BB-plus". (Reporting By Kanika Sikka in Bangalore)