Standard & Poor's senior Puerto Rico analyst said the agency's rating of Puerto Rico's sales tax-backed bonds may drop more notches in the near future than those of the general obligation bonds.
S&P senior director David Hitchcock made the remarks at press meeting at S&P headquarters July 9.
On June 30 S&P put the ratings of bonds from the Puerto Rico Sales Tax Financing Corp. (COFINA), Puerto Rico Employee Retirement System, Puerto Rico Infrastructure Financing Authority, Puerto Rico Convention Center District Authority, and Puerto Rico Highway Transportation Authority on credit watch negative.
In addition it also put the commonwealth's general obligation and appropriation bond ratings on watch negative.
The investment-grade COFINA sales-tax backed bonds may be subject to losing more notches from their rating than the commonwealth's junk-rated GO debt, Hitchcock said.
At Wednesday's meeting Hitchcock also said the rating of the Highway and Transportation Authority debt may go down more than that of the GO rating.
S&P has an underlying rating on the HTA bonds of BB-plus, though many are insured. It rates the first lien COFINA sales-tax backed bonds AA-minus and the GO bonds BB-plus.
Hitchcock said Puerto Rico has a history of not meeting its general fund revenue targets. While Puerto Rico has not yet announced the results for fiscal year 2014, which just ended, Hitchcock said he expected revenues to come in under budgeted figures. He was concerned about Puerto Rico's ability to reach revenue targets in the fiscal year that has just started.
Part of the fiscal year 2015 budget will increase government expenses in future years, he said.
Credit watches are usually resolved in 60 to 90 days, he said.
