Thursday, May 5, 2011

Puerto Rico In Pension Funding Crisis, by Mike Godfrey,, Washington

(Se debe realizar una investigación y responsabilizar a aquellos que hayan malversado y/o invertido mal, los fondos de retiro en Puerto Rico. El peso de la ley debe caer sobre esas personas. Tenemos información impresa de fondos de retiro aprobados por MRE hace tiempo atrás, para dárselos a los dueños de un hotel fracasado en Vieques.)

Last updated 8 hours ago | Thursday, May 05, 2011

The effect on Puerto Rico’s future financial position of its need for additional pension funding was said to be responsible for a threat from Moody’s Investors Service that the current A3 credit rating on its general bond obligations could be downgraded.

A downgrade could affect some USD $28 billion of Puerto Rican debt, which is widely held in the US as it benefits from tax-free status at federal, state and local tax levels.

Puerto Rico’s pension underfunding is considered to be the worst of all US states and territories, and has been increasing for some time. Moody’s has estimated the shortfall at around USD24bn and, if it is added to the USD42bn of Puerto Rican bonds that are guaranteed by taxes, the credit agency has calculated that servicing the resultant total liabilities will represent a considerable strain on its annual tax revenues for a significant period.

Moody’s has said that a review of its credit rating, to be completed in 90 days, could result in a downgrade of one or more notches. A downgrade would bring the Moody’s rating into line with those of Standard and Poor’s and Fitch at the BBB level.