Moody's Wacks Puerto Rico's Debt, Outlook Negative

Moody's Investors Service handed the Commonwealth Puerto Rico a wallop, downgrading it three notches to B2 from Ba2 and impacting $14.4 billion of outstanding general obligation (GO) bonds.

Puerto Rico's downgrade also affects non-GO bonds

The ratings agency also labeled a negative downgrade on commonwealth agencies and public corporations, affecting about $46 billion of non-GO bonds, including $15.6 billion of senior- and subordinate-lien bonds issued by the Sales-Tax Financing Corporation (COFINA), which was lowered to Ba3 and B1 respectively.

The downgrades are based primarily on what the ratings agency said was a shift from difficult budget tightening and revenue enhancement measures...