Puerto Rico Downgrade Was Expected And Priced In

Ratings agency Standard & Poor's downgraded Puerto Rico’s debt to BB+ from BBB- citing liquidity concerns that could force the commonwealth to resort to heavy expenditure cuts or raise revenues sharply. The downgrade pushed Puerto Rico’s credit rating from investment grade to junk grade. Worse, S&P had its debt on a negative watch, signifying that further downgrades were possible.

Puerto Rico Downgrade

The downgrade could in fact exacerbate the island’s cash crunch, considering a lot of its debt is issued with a rider that triggers payments in cash should its rating degenerate below investment grade. Other ratings agencies...