Officials react to new Moody’s downgrade warning

On December 12, 2013, Primera Hora reported official reactions after Moody’s Investors Service placed Puerto Rico’s general obligations (GOs) and other bonds under review for possible downgrade.

Economic Development Secretary Alberto Bacó Bagué said that night the government would strengthen promotion of the Island as an investment destination. He acknowledged that Moody’s report flags weaknesses, but argued it also recognizes “a solid economic development plan” and cited the World Economic Forum on competitiveness in Latin America.

The warning implies the rating house could cut Puerto Rico to speculative grade at any time or, generally, within about 90 days, unless the Island meets the revenue and economy expectations the Government has set for itself. According to the cited report, Moody’s acted because government liquidity has weakened, dependence on short-term loans has risen, and market access remains constrained.

Senate President Eduardo Bhatia defended the year’s fiscal reforms and lamented the decision: “Puerto Rico has addressed and satisfied Moody’s recommendations over the past 12 months.” He added that he regrets Moody’s “changing the rules of the game” and not giving reasonable time to see results, and affirmed: “Puerto Rico will pay its debts.” Review for downgrade ≠ consummated downgrade or default.

Source: Primera Hora. https://www.primerahora.com/noticias/gobierno-politica/notas/reaccionan-a-nueva-advertencia-de-degradacion-de-moodys/