Standard & Poor's cuts Puerto Rico's financing arm, says default certain

[alp227]

Source: Reuters

Standard & Poor's cut the credit rating of Puerto Rico's Government Development Bank (GDB) to 'CC' from 'CCC-' on Tuesday, saying a near-term default at the U.S. territory's financing arm was a virtual certainty.

The downgrade comes after the GDB said it may seek to buy back up to $4 billion of notes at below par as the U.S. commonwealth attempts to restructure up to $72 billion in debt, according to a regulatory filing on Friday.

"We would deem such an exchange as distressed and consider it a default under our criteria," said Standard & Poor's credit analyst Brendan Browne in a statement.

Standard & Poor's 'C' rating is a non-investment grade that indicates a high risk of default.

Read more: http://www.reuters.com/article/2015/07/14/usa-puertorico-gdb-idUSL2N0ZU2MQ20150714

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Longer article in Spanish by El Nuevo Dia: Standard & Poor's degrada al BGF (Banco Gubernamental de Fomento)

[cstanleytech]

1. So similar problem to Greece?

[Igel]

3. Yeah, there are similarities.

Another case of "everybody saw it coming." Slo-mo train wreck.

Issue debt, and not only spend the money but don't fix problems. In fact, they got worse without "austerity." And that's without, IIRC, federal income taxes.

They have a very much non-Greek problem though: They can't go to places like the IMF to take out loans. They have the bond market and ... the bond market. They're like a state in that regard, but very much not like a state in others.

[Recursion]

5. Similar: stuck with a stronger currency than the economy can support

This may hasten calls for either statehood or independence.

[pscot]

2. We'll just have to expell them from the $Dollar Zone

[jtuck004]

4. S&P will say anything for the right price. Grain of salt and all that. n/t

[Nitram]

6. Who would gain by paying S&P to downgrade PR's credit rating?

[jtuck004]

7. There you go, that's what one should be asking. Then again, taking advice from the thieves at

S&P who, just like Goldman and all the others work under a disclaimer that they may be working against you, and helped the banks throw 7 million families out of their homes.

There is ALWAYS someone on the other side of such transactions that is going to get hurt for you to prosper. That is how we do it here - and why we are leaving about 45 million Americans on food stamps to help traitors to the country like this stay wealthy.

Then again, one might wonder what kind of slithery individuals need to do business with thieves like this, or Goldman, or Chase, etc.