Pimco ‘Remains Unenthusiastic’ About Puerto Rico Debt Outlook

Pacific Investment Management Co. said Wednesday it “remains unenthusiastic” about Puerto Rico’s debt because of the island’s elevated borrowing costs and the potential for “draconian” budget cuts.

The struggling U.S. territory has demonstrated “a willingness to impair contracts,” and some politicians have suggested changing the constitution to allow a default on the island’s general-obligation debt, Sean McCarthy, a director at Pimco in New York, said in a note published on the firm’s website.