Moody's Wacks Puerto Rico's Debt, Outlook Negative

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Mark Melin
Published on
Updated on
Puerto Rico PREPA

Moody’s Investors Service handed the Commonwealth Puerto Rico a wallop, downgrading it three notches to B2 from Ba2 and impacting $14.4 billion of outstanding general obligation (GO) bonds. Puerto Rico’s downgrade also affects non-GO bonds The ratings agency also labeled a negative downgrade on commonwealth agencies and public corporations, affecting about $46 billion of non-GO bonds, including $15.6 billion of senior- and subordinate-lien bonds issued by the Sales-Tax Financing Corporation (COFINA), which was lowered to Ba3 and B1 respectively. The downgrades are based primarily on what the ratings agency said was a shift from difficult budget tightening and revenue enhancement…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.