Two of the three leading bond-rating agencies, S&P and Moody’s, recently downgraded Puerto Rico bonds to junk status. Now the third bond rating agency, Fitch Ratings, has downgraded $10.6 billion in Puerto Rico general obligations bonds and nearly $5 billion in Puerto Rico revenue bonds to just one level above junk-bond status. The growing lack of confidence in Puerto Rico’s financial stability likely will continue to hurt Puerto Rico investors who hold UBS Puerto Rico bond funds, which already have lost approximately 50% of their value.
Fitch Ratings downgraded the following Commonwealth of Puerto Rico debt to BBB-:
$10.6 billion Commonwealth general obligation (GO) bonds;
$1.38 billion Public Building Authority government facilities revenue bonds guaranteed by the commonwealth;
$658 million Puerto Rico Aqueduct and Sewer Authority (PRASA) commonwealth guaranty revenue bonds; and
$2.948 billion Employees Retirement System of the Commonwealth of Puerto Rico pension funding bonds.
Fitch also placed a negative rating outlook on the bonds, reflecting an outlook that Puerto Rico’s financial problems may get worse. Fitch is not alone in its opinion as the general consensus appears to be that Puerto Rico’s ability to service its debit, i.e., pay its interest payment obligations, is in question.
Dimond Kaplan & Rothstein, P.A. currently represents dozens of Puerto Rico residents who lost money in UBS Puerto Rico bond funds. We are pursuing FINRA arbitration claims on their behalf to recover UBS Puerto Rico bond fund investment losses.