Puerto Rico Sales-Tax Bonds Decline as Governor Proposes VAT
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Prices on some Puerto Rico sales-tax bonds fell to a seven-month low after Standard & Poor’s cut the debt to junk as Governor Alejandro Garcia Padilla proposes replacing the levy with a value-added tax.
The rating company on Thursday lowered the senior-lien sales-tax bonds, called Cofina, by six steps to B, citing questions about the timing of pledged revenue under the governor’s recommended system. Sales taxes back about $15 billion of Puerto Rico municipal debt.