Puerto Rico

Using dynamic scoring, the Joint Committee on Taxation has estimated that legislation to extend tax provisions, including several related to bonds and Puerto Rico, would result in only $86.56 billion of revenue losses, compared to its earlier estimated $96.95 billion.

Moody's Investors Service has reviewed the new restructuring proposal filed by the Puerto Rico Electric Power Authority (PREPA; Caa3 negative), which states that non-forbearing bondholders would recover 65%-70% of the original legal promise in cash, depending on maturity, and which makes default a virtual certainty.

Trading activity in the municipal market for the second quarter of this year was 14% higher than the previous quarter as well as the second quarter last year, with several Puerto Rico bonds among the most traded, according to the Municipal Securities Rulemaking Board.

Puerto Rico issues were mixed in rather quiet trading on Tuesday after Standard & Poor's lowered its rating on the Puerto Rico Public Finance Corp. S&P dropped the PFC's $1 billion of Series 2011A, 2011B, and 2012A bonds to D from CC following a payment default on the bonds.

Standard & Poor's Ratings Services said it has lowered its rating on $1.0 billion of Puerto Rico Public Finance Corporation (PFC) series 2011A, 2011B, and 2012A bonds to D from CC following a payment default on the bonds as of the close of business Aug. 3, 2015, the first business day following the Aug. 1 stated due date, which fell on a Saturday.

The PRPFC is paying about $628,000 in interest, according to Government Development Bank for Puerto Rico president Melba Acosta Febo. About $58 million in principal and interest is due Monday.

In Fitch Ratings' opinion, Puerto Rico's reported decision to miss an August 1 debt service payment on appropriation-backed debt (not rated by Fitch) due Monday, Aug. 3, is consistent with both the commonwealth's stated intent to restructure its debt and its current liquidity pressures.

Puerto Rico’s government has suspended setting aside money for its general obligation debt, increasing concern among some investors that even the island’s government-guaranteed debt may not be paid.

Puerto Rico’s economic activity index was down 0.3% in June from May.

Puerto Rico Public Finance Corp. may miss a $58 million bond payment due Monday, in what could be the first volley in the biggest municipal default in history.