March 12 (The following statement was released by the rating agency)
Fitch Ratings' 'BB' rating on the commonwealth of Puerto Rico's general obligation (GO)
bonds assumed that the commonwealth would be able to execute a sizable transaction in the near
term to bolster liquidity. Yesterday's offering, in which the commonwealth sold $3.5 billion in
GO bonds with a 2035 maturity, is consistent with that assumption, and demonstrates the
ability of the commonwealth to access the market. Notably, the commonwealth was
able to sell the full amount authorized.
Fitch believes that the successful execution of this transaction provides the
commonwealth breathing room as it continues to address ongoing economic and
fiscal challenges. The sale, the vast majority of which replaces existing debt
rather than adding to the commonwealth's debt load, will improve liquidity at
the Government Development Bank for Puerto Rico and remove potential near-term
Fitch's 'BB' rating on the commonwealth's GO bonds reflects demonstrated
weakness in the Puerto Rico economy, very high liabilities including outstanding
debt and unfunded pensions, challenged though improving financial operations,
and limited financial flexibility. Fitch continues to see the economy as the
key to future rating direction, as economic growth will be needed to support the
commonwealth's high debt levels and other long-term liabilities, as well as to
achieve and maintain a structurally balanced budget.
For further information on Puerto Rico's GO rating, please see Fitch's March 10,
2014 new issue report, available at www.fitchratings.com.