Puerto Rico Borrowing Costs Rise on Rating Concern: Muni Credit

Investors who snapped up four times as much Puerto Rico debt this year as in 2011 are imposing higher borrowing costs on the U.S. commonwealth even as its debt outperforms all but one state.

The Puerto Rico Public Buildings Authority last week sold lease-backed bonds the day after Standard & Poor’s said it may cut the island’s general-obligation rating, now two steps above junk. The agency sold 30-year tax-exempts rated BBB, the same as the commonwealth’s, to yield 5.38 percent. The spread above AAA was 2.17 percentage points, rising from 2.1 points in August and 1.5 points in a 2009 issue, data compiled by Bloomberg show.