Puerto Rico’s Government Development Bank may all but drain its available funds by March 31 if revenue collections trail projections, Moody’s Investors Service said.
The GDB, which handles the struggling U.S. territory’s debt sales and extends loans to the government and its agencies, had $2.24 billion of cash, bank deposits and investments as of June 30, according to a report Moody’s released today.
That amount may drop to $212 million by March 31 if Puerto Rico collects less tax revenue than estimated in its $9.56 billion budget for the fiscal year that began July 1, according to the report.
“If such conditions occur, it will further erode the commonwealth’s credit position and possibly push the general obligation and related ratings lower,” Moody’s analysts led by Ted Hampton wrote in the report.
Puerto Rico is trying to revive its economy while contending with $73 billion of debt, most of which is tax-exempt nationwide, making it a popular holding for U.S. municipal-bond mutual funds.
The Federal Reserve Bank of New York said in a report yesterday that the island should lower the ratio of public debt to gross national product to 60 percent -- the level of 14 years ago -- from 100 percent last year.
Moody’s rates Puerto Rico B2, its fifth-highest speculative grade, after cutting it to junk in February.