Moody’s Investors Service has upgraded the Puerto Rico Industrial Development Co.’s general purpose revenue bonds to Baa1 from Baa2, the same rating as Puerto Rico’s general obligation bonds.
Approximately $210 million of outstanding debt is affected.
“The upgrade reflects the fact that PRIDCO’s management team has managed to keep revenue and debt service coverage relatively stable during one of the worst economic downturns in the commonwealth’s history and recently called some near-term debt, bolstering coverage,” analysts said in a report.
PRIDCO promotes economic development of Puerto Rico and provides industrial facilities for lease or sale to private manufacturing companies.
The pledged revenue stream derived from the rentals has declined steadily, but still provides satisfactory coverage, Moody’s said. It assigned a stable outlook, saying the credit is expected to remain stable in light of Puerto Rico’s modest economic growth forecast and expectation of continued strong management.
The rating could go down if the debt service coverage declines or if actions taken by the commonwealth weaken PRIDCO’s financial state or structure.
PRIDCO’s rating is independent from Puerto Rico’s GO rating, and while both may be influenced by changes in the commonwealth’s economy, the ratings may not move in tandem, Moody’s said.
Moody’s rates Puerto Rico’s GOs Baa1 with a negative outlook.