Fitch Ratings said it maintained the Rating Watch Negative on the CC rating for the following Commonwealth of Puerto Rico debt: commonwealth of Puerto Rico GO bonds; Puerto Rico Electric Power Authority (PREPA) power revenue bonds; Puerto Rico Aqueduct and Sewer Authority (PRASA) senior lien revenue bonds; Puerto Rico Sales Tax Financing Corporation (COFINA) senior lien sales tax revenue bonds and first subordinate lien sales tax revenue bonds; Employees Retirement System of the Commonwealth of Puerto Rico (ERS) pension funding bonds; Puerto Rico Public Buildings Authority (PBA) government facilities revenue bonds guaranteed by the Commonwealth and rated by Fitch; and PRASA Commonwealth guaranty revenue bonds.
The CC rating indicates Fitch's belief that default of some kind appears probable, with the Rating Watch reflecting the commonwealth's stated intent to restructure its debt in the near term.
The commonwealth continues to seek federal assistance, and numerous proposals are active in the U.S. Congress. These proposals include granting of bankruptcy authorization, financial and bonding support, and increased federal oversight. Fitch will continue to monitor developments at the federal level and evaluate any enacted legislation for its impact on prospects for bondholders.
The recent decision by the U.S. Supreme Court to take up the appeal of lower court rejections of the 2014 restructuring law introduces additional uncertainty, particularly for negotiations with PREPA creditors.
