By Josh Beckerman
Standard & Poor's Ratings Services has lowered its general
obligation rating for Puerto Rico one notch, to BB--two notches
into junk status--from BB+, one of several reactions by rating
firms to new legislation that allows the overhaul of debts of some
public entities.
On June 27, S&P placed the general obligation rating on
CreditWatch with negative implications.
S&P reiterated its concerns about the debt-overhaul
legislation on Friday. S&P believes the bill is "indicative of
the mounting economic and fiscal challenges for the commonwealth as
a whole."
S&P said, although it views the recent enactment of a fiscal
2015 budget that "significantly improves structural alignment" as a
favorable sign, "we nevertheless continue to view the
commonwealth's fiscal situation as precarious."
S&P also lowered certain other ratings, including those of
the Puerto Rico Sales Tax Financing Corp.'s first lien sales tax
bonds and the Puerto Rico Highways and Transportation
Authority.
S&P said the ratings have been removed from CreditWatch and
assigned a negative outlook.
Puerto Rico bond prices fell following the enactment of the
Puerto Rico Public Corporation Debt Enforcement and Recovery Act on
June 26.
Fitch Ratings on Wednesday cut the rating of Puerto Rico's
general obligation bonds one notch. Puerto Rico's Treasury
Department and Government Development Bank issued a joint statement
calling Fitch's assumptions "erroneous."
On July 1, Moody's Investors Service downgraded Puerto Rico's
bond rating to B2 from Ba2.
Write to Josh Beckerman at josh.beckerman@wsj.com