Puerto Rico’s Default Risk High in Next Two Years, Moody’s Says

There’s a high probability that Puerto Rico will default on its general-obligation, sales-tax or Government Development Bank debt during the next two years, Moody’s Investors Service said.

Revenue shortfalls because of the island’s “sluggish” economic growth and the political risk of potential changes to Puerto Rico’s tax system may cause outcomes unfavorable to bondholders, Ted Hampton, a Moody’s analyst in New York, said in a report on Thursday. Those are among pressures that have increased default risk to “a high level during the next two years,” Hampton said.