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S&P cuts GDB Issue-Level Ratings to ‘D’

By on September 9, 2016

s&p stoplightSAN JUAN – S&P Global Ratings lowered Friday some of its issue-level ratings on the Government Development Bank For Puerto Rico’s (GDB) senior unsecured notes outstanding to ‘D’ (default) from ‘CC’ following missed interest payments on debt service due Aug. 1 and Sept. 1. It also affirmed its ‘SD’ (selective default) long-term issuer credit rating on GDB.

“On Sept. 7, the trustees of the aforementioned securities, through an Electronic Municipal Market Access filing, confirmed that GDB had failed to cure its defaults on the interest payments that were due Aug. 1, through the 30-day grace period. In addition, they confirmed that GDB was in default on all interest payments due Sept. 1, 2016 as well, because the GDB board of directors decided not to seek authorization (as part of the Executive Order) from the governor to make this interest payment. No principal was due on any of the above dates,” the credit rating company’s release reads.

“We believe a default on GDB’s other upcoming debt maturities and interest payments is virtually certain, and this is reflected in our ‘CC’ rating on the securities not currently in default,” said S&P credit analyst Shameer Bandeally.

The release adds that S&P will possibly lower its ratings “on such instruments to ‘D’ upon an actual default of principal or interest payment on the respective scheduled due dates. When all of GDB’s debt is in default, we will likely lower the issuer credit rating to ‘D’ [for default] from the current ‘SD’.”

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