Best’s Briefing: No Rating Impact Expected From Puerto Rico’s Debt Restructuring Law

With the recent passage of the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (Puerto Rico Recovery Act), A.M. Best has ascertained that there will be no rating actions based on this reduction in credit quality of Puerto Rico related bonds.

The Puerto Rico Recovery Act provides a framework under which certain public corporations can restructure existing debt and potentially defer or reduce payments on outstanding bonds. The chairman of the Government Development Bank for Puerto Rico (GDB) clarified that the Puerto Rico Recovery Act specifically excludes the Commonwealth of Puerto Rico, all of its municipalities, the GDB, Sales-Tax Financing Corp (COFINA) and certain other related agencies. In signing the Puerto Rico Recovery Act, the intent of the administration was to strengthen the GDB, the general fund and Puerto Rico’s general obligation bonds by allowing public corporations to be self-sustaining, no longer requiring support from various government agencies.

For the full, complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=227028.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.