NEW YORK, Feb 4 (Reuters) – Some Puerto Rico municipal bond
yields rose above 10 percent on Tuesday after Standard & Poor’s
Ratings Services cut the commonwealth’s credit rating to junk.
A Puerto Rico general obligation refunding bond maturing in
2036 hit a yield of 10.16 percent shortly after S&P; downgraded
the cash-strapped territory’s credit rating, from 9.66 percent
earlier in the day.
The iShares U.S. Municipal Bond exchange-traded fund
dropped about half a percent after the downgrade.
One market participant said the cut to BB+, one level below
investment grade, was a surprise because it came so soon after
S&P; had put the Caribbean island on notice for a downgrade.
“It’s a little late in the day to see what the true impact
is going to be,” said Gary Pollack, head of fixed income trading
at Deutsche Bank in New York.
