Moody’s cites ‘business reasons’ to withdraw Puerto Rico’s credit ratings
Moody’s Investors Service announced it has withdrawn the general obligation and related ratings of the Commonwealth of Puerto Rico, citing only “business reasons,” for pulling out.
The decision to no longer provide ratings includes those assigned to the Puerto Rico Aqueduct & Sewer Authority, the Puerto Rico Electric Power Authority, and the University of Puerto Rico.
At the time of the withdrawal, Puerto Rico’s general obligation rating was Ca and the outlook was negative.
The full list of affected issuers also includes: the Puerto Rico Public Buildings Authority; the Puerto Rico Public Finance Corporation; the Puerto Rico Employees Retirement System; the Puerto Rico Municipal Finance Agency; the Puerto Rico Convention Center District Authority; the Puerto Rico Highway & Transportation Authority; the Puerto Rico Infrastructure Financing Authority; the Puerto Rico Industrial Development Company; and AFICA (only debt issued on behalf of the University of Puerto Rico included in this action).
“Moody’s has decided to withdraw the ratings for its own business reasons,” the agency said in a statement. “[Moody’s’] business reasons generally do not reflect any concerns about the rated entity’s creditworthiness or the quality of its management. Where appropriate, Moody’s’ decision to withdraw a rating under these circumstances will attempt to balance the informational benefit to market participants from maintaining a credit rating against the resources required to maintain and monitor that credit rating or other business considerations.”
According to its policy to withdraw credit ratings, Moody’s states it may pull out for: “Incorrect, insufficient, or otherwise inadequate information; bankruptcy/liquidation/debt restructuring/write-down of a structured finance security; if a rated entity becomes the subject of a corporate reorganization or regulator-imposed restructuring, including a merger or acquisition, or enters into any other form of governmental administration; if the applicable Credit Rating Methodology states that Moody’s will not maintain credit ratings in the event that aspects of the transaction cross specified thresholds; maturity of obligation or termination of program; and full write-down of principal balance,” among other reasons.
“Today’s withdrawal actions are not related to the current ongoing restructuring processes under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA),” the ratings agency further stated.
Requests for comments from the Financial Oversight and Management Board for Puerto Rico, and the Fiscal Agency and Financial Advisory Authority (AAFAF, in Spanish), the two entities involved in Puerto Rico’s fiscal matters and the Commonwealth’s debt restructuring, were unsuccessful.
