Fitch Ratings said it downgrades the Puerto Rico Aqueduct and Sewer Authority's approximately $3.5 billion of outstanding revenue bonds, series A, B, 2012A and 2012B (senior lien), to BBB-minus from BBB.
The rating outlook is revised to negative from stable.
PRASA's historical reliance for both direct and indirect support from the commonwealth to balance its operations as well as the role the commonwealth has played in PRASA's ratemaking decisions create a significant linkage to the commonwealth's credit quality (general obligation [GO] bonds rated BBB-minus and Negative Outlook by Fitch), which was downgraded in March 2013.
While PRASA's governing body has initiated steps to reach financial independence and self-sufficiency for fiscal 2014 and beyond, until PRASA demonstrates that it is a financially sound and self-sustaining enterprise, its credit quality will be strongly tied to and subsequently limited by the commonwealth's GO rating.
