(Adds rationale, background, quote, Fitch, S&P, Puerto Rico
WASHINGTON, June 26 Moody's Investors Service
cut its rating of Puerto Rico's power authority to Ba3 from Ba2
on Thursday, becoming the final credit rating agency to
downgrade the struggling public corporation on concerns about
The cut comes a day after Puerto Rico's governor unveiled
legislation that would allow the territory's corporations unable
to pay their debts to restructure their finances and operations.
Earlier this month, Standard & Poor's Ratings Services and
Fitch Ratings downgraded the Puerto Rico Electric Power
Authority, or PREPA, saying expiring lines of credit pose
immediate threats to PREPA's liquidity.
PREPA is currently negotiating to extend the lines of
credit, and there is uncertainty if Puerto Rico's Government
Development Bank will step in if those negotiations fail.
"Even if PREPA is able to address its immediate liquidity
issues, the company faces continuing challenges over the next
several years," Moody's said.
Moody's said the authority also must confront negative cash
flow, high electricity rates, high rates of non-payment, and
"perceived constraints on raising revenues to fund a sizeable
capital spending program needed to convert electricity
generation from high-cost oil to lower-cost natural gas."
The governor, Alejandro Garcia Padilla, has also introduced
legislation to authorize a bond sale of $60 million for capital
improvement projects. Puerto Rico's legislative session ends
(Reporting By Lisa Lambert; Editing by David Gregorio)