Bangkok--15 Oct--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'BBB-' standard long-term rating to Puerto Rico Municipal Finance Agency's (MFA) $427 million series 2008A bonds. The outlook is stable.
The rating reflects a several obligation of participating municipalities; commonwealth appropriations of matching equalization funds; a moral obligation pledge by the commonwealth to replenish the debt service reserve account, should any of the preceding sources prove insufficient to cover debt service; and strong oversight by Government Development Bank for Puerto Rico (GDB) and strong coverage averaging 5.8x.
The bonds are secured by a several obligation of participating municipalities, secured by the full faith and credit of each municipality, including a dedicated property tax levied by each municipality sufficient to cover the debt service on outstanding and proposed debt. Also pledged is a first lien on the basic property tax levied by municipalities, which has never been tapped to pay this debt service. Commonwealth appropriations of matching equalization funds, which make up roughly 33% of estimated total revenue in fiscal 2008, are also pledged to the payment of MFA debt service. The security also includes a moral obligation pledge by the commonwealth to replenish the debt service reserve account, should any of the preceding sources prove insufficient to cover debt service. A total of 65 borrowers have taken out 194 loans through the MFA totaling $426.8 million. The loans are concentrated among seven borrowers accounting for 58.8% of the total amount of the loans. Carolina, P.R. is the single largest borrower, accounting for 22.2% of the total. None of the borrowers is rated by Standard & Poor's.
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Media Contact:
Edward Sweeney, New York, (1) 212-438-6634
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Analyst Contacts:
Horacio Aldrete-Sanchez, Dallas (1) 214-871-1426
David G Hitchcock, New York (1) 212-438-2022