Puerto Rico

The Federal Reserve of New York recommended Puerto Rico's government make six major changes in a report it issued Thursday.

Pedro Pierluisi, Puerto Rico's sole non-voting member of Congress, has introduced legislation that would allow the commonwealth's government to authorize certain government-owned corporations to enter Chapter 9 municipal bankruptcy.

Standard & Poor's Ratings Services said it has lowered its rating on Puerto Rico Electric Power Authority's (PREPA) power revenue bonds two notches to CCC from B-minus.

Puerto Rico Electric Power Authority bonds are trading at low prices compared with those other issuers that have drawn on their debt service reserves, as investors weigh risks that range from the island's public corporation debt restructuring act to political pressure to restrain power prices.

UBS is facing more than $600 million in damage claims filed by Puerto Rico investors in closed-end bond funds, the bank said in its second quarter earnings report Tuesday.

Many analysts see a default by the Puerto Rico Electric Power Authority as a probability, though they differ in how that would happen and what the impact of the default would be on other Puerto Rico credits.

Puerto Rico called for the dismissal of a suit challenging the commonwealth's newly passed public corporation restructuring law.

A new company is aiming to keep holders of Puerto Rico bonds informed about the court proceedings there.

Puerto Rico's unemployment rate plunged seven tenths of a percentage point in June from May, bringing the rate to the lowest level since October 2008. But the number employed is also down.

Puerto Rico officials are signaling that the power authority known as PREPA, with $8.7 billion of debt, is the most likely of the island's largest eligible public corporations to restructure its obligations under the commonwealth's new Recovery Act.