November 9, 2012 / 4:25 PM / 5 years ago

S&P says slow pension reforms in Puerto Rico risk downgrades

Nov 9 (Reuters) - Standard & Poor’s Ratings Service on Friday said “prolonged inaction” on reforms of Puerto Rico’s ailing government workers pension system by the island’s governor-elect could lead to a one-notch downgrade of Puerto Rico credit ratings.

The Wall Street credit agency said Tuesday’s election, during which Alejandro Garcia Padilla narrowly beat Gov. Luis Fortuno, may prove crucial to Puerto Rico’s rating, according to a news release. No immediate ratings action was seen, S&P said.

“However, we still believe that there is at least a one in three chance that we may lower these ratings later this year or in early 2013,” S&P said.

S&P rates the island’s general obligation debt BBB and its appropriation debt BBB minus and has negative outlooks on both types of debt.

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