NEW YORK - Moody’s Investors Service on Tuesday placed $28 billion of Puerto Rico debt on watchlist for possible downgrade.
Analyst said the commonwealth’s weak pension fund could place stress on its operating budget.
Moody’s rates Puerto Rico’s general obligation credit A3.
Analysts revised the island’s outlook to negative from stable on Aug. 10, 2010, citing the retirement fund’s 9.8% funding level and its limited liquidity. The pension fund will run out of assets by fiscal 2019.
Puerto Rico has $9.2 billion of outstanding GO debt. The rating action affects a combined $28 billion of outstanding debt that is linked to the commonwealth’s credit.
Moody’s plans to complete its review of the credit within 90 days.
Standard & Poor’s and Fitch Ratings rate Puerto Rico BBB and BBB-plus, respectively. Both rating agencies assign a stable outlook to the commonwealth.
