NEW YORK Feb 11 Puerto Rico's economy in
December contracted for a 13th straight month compared to a year
earlier, government data showed on Tuesday, suggesting the
island is no closer to exiting a multi-year recession.
The Government Development Bank said its Economic Activity
Index, which tracks employment, gasoline sales and other
indicators on the island, declined to 124.5 in December, 5.2
percent below its level a year earlier.
Compared to November, the economy shrank 1 percent, snapping
a three-month run of monthly increases.
The data comes after all three major credit rating agencies
cut Puerto Rico to junk-bond status and should add to worries
about the U.S. territory's ability to finance itself.
Total non-farm payrolls in December averaged 922,600, a 2.6
percent decline, according to the data, while average
electricity and power generated fell 4.7 percent.
A big issuer of municipal bonds, the island has been in or
near recession for eight years as it suffers from a loss of U.S.
federal government economic support, cuts in Puerto Rican
government spending, high oil prices and population loss.
The EAI has been increasingly followed by hedge funds and
others drawn to Puerto Rico debt by the lure of high interest
rates. Tax-free yields on some of Puerto Rico's municipal debt,
which totals some $70 billion, are as high as 10 percent.
Over the last week, Standard & Poor's, Moody's Investors
Services and Fitch Ratings have all cut Puerto Rico's credit to
junk. That could complicate efforts to borrow and has triggered
nearly $1 billion in accelerated payments and collateral calls
on various swaps agreements that markets fear could push the
commonwealth closer to restructuring its debt.
The government has sought approval to issue up to $3.5
billion in new general obligation debt and said Tuesday it had
hired three Wall Street banks to underwrite a forthcoming issue.