Standard & Poor's Ratings Services said it lowered its rating two notches to CCC-minus from CCC-minus on Puerto Rico Aqueduct & Sewer Authority's (PRASA) senior-lien revenue bonds and removed it from CreditWatch with negative implications. The outlook is negative.
PRASA has approximately $3.5 billion in senior-lien revenue bonds. The bonds are secured, as per the terms of the 2008 master agreement of trust and as amended in 2012, by a first lien on the gross revenues of PRASA's retail waterworks and sanitary sewer system.
"The rating action is based on our downgrade to 'CCC-' of the Commonwealth of Puerto Rico's general obligation debt on June 30," said Standard & Poor's credit analyst Theodore Chapman. That action was based on our view that a default, distressed exchange, or redemption of the commonwealth's debt appears inevitable within the next six months absent unanticipated significantly favorable changes in the issuer's circumstances.
