Following the election of Puerto Rico’s new governor, Standard & Poor’s said on Friday that it could lower the commonwealth’s credit ratings if the administration does not continue to address pension problems.

Analysts said in a report that the election of Alejandro Garcia Padilla has no immediate impact on the commonwealth’s credit ratings, but his electoral platform and statements regarding unfunded pension liabilities could result in inaction or a diluted pension reform package.

“Either of these two potential outcomes (delayed or insufficient action to adopt a pension reform package) would result in a one-notch downgrade to our rating in the next few months, with potential for additional deterioration within the next year,” analysts said.

The possible downgrade would apply to Puerto Rico’s general obligation bonds, rated BBB, and its appropriation bonds, rated BBB-minus. Both have negative outlooks.

Puerto Rico has around $52 billion in net tax-supported debt outstanding.

Standard & Poor’s said that it would analyze the fiscal and economic policy choices over the next few months of both the current administration and the governor-elect, as well as the new legislature.

“Our current ratings are predicated on the assumption that commonwealth officials will remain committed not only to the maintenance of fiscal discipline, but also to the adoption of swift and comprehensive fiscal measures,” the report said.

Analysts at Moody’s Investors Service have also said that the election results will not have any immediate effect on Puerto Rico’s rating, but that they will be watching new measures going forward.

Moody’s rates Puerto Rico’s GO bonds at Baa1, with a negative outlook.

Though it has no immediate effect on its credit, the transition to an unfamiliar governor from a known fiscal reformer will have an immediate impact on the bond market.

“Mr. Padilla’s plans to maintain a course to reach structurally balanced budgets are unclear,” said Richard Larkin, a senior vice president and director of credit analysis at Herbert J. Sims.

“A return to previous administrations’ borrow and spend philosophies would jeopardize Puerto Rico’s bond ratings and threaten market access for a prolific tax-exempt muni bond issuer,” he said.

Alan Schankel, a managing director at Janney Capital Markets, has also cited the uncertainty surrounding the new governor’s fiscal plans, calling it a credit negative for bondholders.

Investor anxiety in the months leading up to the election has been clear from the steady increase in credit spreads on Puerto Rico’s bonds.

Yields on Puerto Rico’s 30-year GO bonds reached 225 basis points above the triple-A benchmark at the beginning of November, compared to 210 basis points at the beginning of August. On 20-year bonds they had reached 245 basis points, compared to 215 in August.

Following the election, those yields have climbed even higher. On Nov. 8, yields on the 30-year bonds had jumped to 233 basis points above the benchmark, and on the 20-year bonds, they were at 250 basis points.

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