Moody’s Investors Service has placed the ratings of $6.8 billion outstanding Puerto Rico Sales Tax Financing Corporation’s senior sales tax revenue bonds’ Aa2 rating and $9.2 billion in subordinate sales tax revenue bonds’ A1 rating on review for possible downgrade, the agency announced Tuesday.
The bonds are on review for possible downgrade due to the need for additional analysis prompted by the application of Moody’s revised U.S. Public Finance Special Tax Methodology, published Mar. 27, 2012.
“This is a routine action that Moody’s is taking to temper the classification of all payable special tax bonds to the new methodology they have decided to implement,” said Government Development Bank President Juan Carlos Batlle. “They will be completing the same assessment in at least 27 other jurisdictions.”
“Moody’s expects to conduct further analysis of expectations for future economic and revenue growth and debt service coverage, all within the framework of the recently published U.S, Public Finance Special Tax Methodology which has prompted reviews of our special tax credits in the municipal sector,” the agency said in a brief statement.
“We expect to conclude the review within 90 days. The results of the analysis could result in rating changes on either or both of the liens, possibly of more than one notch.”
Batlle noted: “This is not the first time a ratings agency makes changes to its evaluation methodology. As a result of these changes in evaluation methodology, sometimes the classification can go up or down, or remain the same. Moody’s undertook a change in methodology in April 2010, and as due in part to the result of this change in methodology and in part as a result of our good fiscal management, the classification of our general obligations scaled three notches.”