Kroll Bond Rating Agency Releases Research Report: “Puerto Rico’s Economic Prospects Deepen its Quagmire”

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has released a public-finance research report entitled “Puerto Rico’s Economic Prospects Deepen its Quagmire” in coordination with its sovereign-ratings unit. The report makes the following key points:

  • Although Puerto Rico is an issuer in the U.S. public-finance market, comparing it to sovereign “rising stars” provides a useful reference for Puerto Rico’s credit prospects.
  • Puerto Rico’s lack of monetary sovereignty necessitates even deeper structural reforms.
  • Absent such reforms, Puerto Rico’s return to investment grade may be prolonged and is not assured.

The current dialogue surrounding the solution to Puerto Rico’s fiscal crisis focuses on debtor behavior towards creditors, fiscal governance, the prioritization of fiscal expenditures, and also macroeconomic prospects, a key determinant of future debt sustainability. As is the case with many sovereign or public-finance issuers that restructure their debts, Puerto Rico’s structural impediments to growth have contributed to its debt trap.

This piece discusses the important role that economic vibrancy plays in post-crisis debt sustainability. It highlights the economic recoveries of sovereign countries that defaulted on debt and subsequently achieved investment grade ratings. KBRA believes that grave challenges lie ahead for Puerto Rico without serious structural reforms necessary to improve its macroeconomic performance.

To view the report, please click here.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical:
Kroll Bond Rating Agency
Joan Feldbaum-Vidra, Managing Director
646-731-2362
jfeldbaumvidra@kbra.com
or
Paul Kwiatkoski, Managing Director
pkwiatkoski@kbra.com
or
Karen Daly, Senior Managing Director
646-731-2347
kdaly@kbra.com

Contacts

Analytical:
Kroll Bond Rating Agency
Joan Feldbaum-Vidra, Managing Director
646-731-2362
jfeldbaumvidra@kbra.com
or
Paul Kwiatkoski, Managing Director
pkwiatkoski@kbra.com
or
Karen Daly, Senior Managing Director
646-731-2347
kdaly@kbra.com