Moody's Investment Service is concerned about Puerto Rico's liquidity and market access, the rating agency said in a report Tuesday.
Unless the Government Development Bank for Puerto Rico can sell at least $1 billion of bonds to refinance some debt owed to it, its cash as of March 31 will be 22% below a March 2014 projection, said Edward Hampton, a senior credit officer at Moody's.
The GDB's Oct. 17 liquidity forecast "is credit negative because it underscores that liquidity of the Commonwealth of Puerto Rico remains vulnerable, and reliant on continued bond market access, even as lenders impose increasingly onerous terms and punitive borrowing costs," Hampton said.
The GDB is planning to have the Puerto Rico Infrastructure Finance Authority sell bonds to refinance Puerto Rico Highway and Transportation Authority debt to the GDB. PRHTA debt accounts for about 21% of the GDB's loan portfolio.
Hampton acknowledges that Puerto Rico will likely succeed in refinancing at least a portion of the PRHTA debt.
If Puerto Rico were to succeed in the bond sale and bring $1 billion to the GDB, for example, Puerto Rico's liquidity on June 30, 2015 would be 72% higher than it had projected in March 2014, Hampton said.
