Wednesday, August 10, 2011

Puerto Rico Plans $225 Million Sale After Downgrade: Muni Credit

Did I hear someone say Puerto Rico is better off than the other states of the Union? MJ
Puerto Rico Plans $225 Million Sale After Downgrade: Muni Credit
Aug. 8 (Bloomberg) -- Puerto Rico is set to sell $225 million of revenue bonds as soon as this week after its rating was downgraded by Moody's Investors Service one level today to Baa1, lower than any U.S. state.
The issue follows Standard and Poor's downgrade of U.S. debt on Aug. 5 to AA+. Puerto Rico Public Buildings Authority plans to offer the lease-revenue debt, which is guaranteed by the commonwealth, starting as soon as tomorrow, first to individual investors and then to institutional buyers.
Moody's also assigned the commonwealth a negative outlook, citing "continued financial deterioration of the severely underfunded retirement systems, continued weak economic trend and weak finances, with a historical trend of funding budget gaps with borrowing," the ratings company said today in a statement.
Debt of the Puerto Rico authority, which finances construction of government buildings, is exempt from federal, state and local taxes.