Moody's sends Puerto Rico's bonds deeper into junk territory
The downgrade to 'Caa3' from 'Caa2' affects about $55.5 billion in bonds and indicates imminent default with little prospect for recovery. Bonds of the Puerto Rico Aqueduct and Sewer Authority were also downgraded to 'Caa3.'
Moody's said the commonwealth's decision to devise broad restructuring plans were "clear signs that holders of even those Puerto Rico securities with strong legal protections face significant loss."
"It appears unlikely that a limited restructuring excluding those better-protected bonds will be sufficient for Puerto Rico to gain the relief desired," Moody's added. Puerto Rico's rating has declined 12 notches since 2011, according to Moody's.
The outlook for all affected securities remains negative, Moody's said. ■