Moody's late Wednesday placed all
The move by Moody's drew a response from Gov. Alejandro García Padilla, who pointed to gains in the island's economic index in the past two months and improvements in the government's fiscal position.
"I see with optimism the first signs, even if only incipient signs, that we are going towards economic stability,"
Moody's currently rates
Moody's also placed the ratings for the
Moody's had affirmed these ratings on
In its ratings update, Moody's lists five factors that could trigger a
Fitch had said the high yields that market participants are demanding on
Both Fitch and Moody's are looking for
The timing of the review announcement fueled speculation by
A person familiar with the matter said that
"The commonwealth has swaps and financings that include collateral and acceleration provisions in the event of a downgrade by any one of [the] three major credit rating agencies," Moody's analyst
Donahue said he has heard that other banks that have made short term lending to
The GDB says it has good liquidity, but it has not publicly released data on its financial condition and may not be in as good a shape as it says, Donahue said.
He said he's heard that GDB has been asking government authorities to move deposits from local
Larkin said he thought there was about a 50% chance that at least one of the ratings agencies would downgrade the island's GO debt to a speculative grade in the next several months.
However, a downgrade to a speculative grade won't lead mutual funds to flood the market with bonds, Larkin said. Most of the funds that would sell in this case have already sold, he said.
A downgrade would make things more difficult for
Schankel said he thought the December Economic Activity Index will be key to determining whether the ratings agencies will downgrade
On Thursday Puerto Rico announced November net revenues that fell 9.1% short of the government's projections. Over the first five months of the fiscal year net revenues are still 2.6% above projections.
Schankel said the government has reasons to expect December revenues to be much larger than those for November. How these turn out will be much more important than what has happened with November revenues, he said.
"While Moody's has placed our general obligation and related bonds on review, we are pleased that they have identified that economic indicators may point to the start of economic stabilization for the commonwealth," Puerto Treasury Secretary
The eight other bonds or notes currently at Baa3 put on review for a downgrade are:
Robert Slavin is a reporter for The Bond Buyer.
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