Standard & Poor’s cuts Puerto Rico’s credit to junk

On February 4, 2014, Standard & Poor’s cut Puerto Rico’s credit to junk, El Nuevo Día reported. The rating agency lowered Commonwealth general obligations (GOs) from BBB− to BB+ and, in related actions, cut appropriation debt of the Commonwealth and the Employees Retirement System to BB, and also cut the Government Development Bank (GDB) to BB; the notes stayed on CreditWatch with negative implications.

According to the S&P report cited that afternoon by island press, the decision followed a liquidity review: reduced access to GDB liquidity and constraints that, in the agency’s view, do not justify investment grade even with a potential issuance the following month. A composite score of 3.2 (scale 1.0–4.0) would point to BBB, but override factors — system support, unfunded pensions, liquidity and market access — pulled the rating down.

ENDI’s primary sits behind a paywall; this note does not invent agency lists or total-debt figures beyond the public peg of the junk downgrade. A credit downgrade ≠ default or theft. Cousin: CPI Stiglitz (587) on rating-agency legitimacy.

Source: El Nuevo Día. https://www.elnuevodia.com/negocios/consumo/notas/standard-poors-degrada-a-chatarra-el-credito-de-puerto-rico/