Standard & Poor’s revised its outlook on $1.1 billion of outstanding bonds issued by the Puerto Rico Municipal Finance Agency to negative from stable.
The rating was affirmed at BBB-minus.
“The outlook revision is based on our assessment of the pledged revenues securing the bonds, including revenue derived from the commonwealth’s pledge to appropriate funds for the repayment of debt service,” said analyst Horacio Aldrete-Sanchez.
While revenue from local property tax collections has produced adequate coverage of annual debt service, the negative outlook reflects a view that the maintenance of coverage levels consistent with historical levels requires the inclusion of Puerto Rico’s appropriations, the report said.
The outlook could be revised to stable if the MFA maintains coverage and if Standard & Poor’s revises the outlook on the commonwealth’s appropriation rating to stable.
The MFA is a municipal bond bank, with the purpose of consolidating the credits and financing requirements of numerous municipalities in the commonwealth.
