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Puerto Rico Avoiding Junk Plans 67% Water-Rate Hike: Muni Credit

Bonds of the Puerto Rico agency that is the commonwealth’s sole water provider are the most expensive this year as the authority plans to boost rates by 67 percent and wean itself from government financing.

Puerto Rico’s Aqueduct & Sewer Authority, which serves 1.3 million customers and has about $3.4 billion of junk-rated debt, anticipates increasing water bills July 1 as the commonwealth plans to end subsidies. Some investors are treating the debt as if it were investment grade because of the planned rate boost and goals to reduce leaks, said Robert Amodeo, a portfolio manager at Western Asset Management.