Standard & Poor’s Cuts Puerto Rico’s Sovereign Debt Credit Rating to BBB- (Near-Junk Status)

by Colonel on March 13, 2013

“Standard & Poor’s Ratings Services cut its general obligation credit rating for Puerto Rico on Wednesday to BBB minus, just one step from junk status, saying it was worried the Caribbean island’s government budget gaps would prove hard to close.

“The outlook is negative,” the Wall Street credit-ratings group said in a news release.

“We base the downgrade on the result of an estimated fiscal 2013 budget gap, which we view as significantly larger than originally budgeted, absent corrective action,” said S&P credit analyst David Hitchcock.

With chronic double-digit unemployment rates and a dwindling population, Puerto Rico has long run substantial budget gaps that have been reduced by about 90 percent from $3.3 billion in 2009. But the island has yet to produce balanced budgets sought by institutional investors and bond analysts.

” — Michael Connor, Copyright 2013 Thomson Reuters

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