The U.S. effort to help pull Puerto Rico from a fiscal crisis has rating agencies at odds over another U.S. territory's debt.
Fitch Ratings cut Guam's business-tax revenue bonds to junk last week, arguing that Puerto Rico's rescue law, known as Promesa, "fundamentally" alters the premise used to rate debt issued by territorial governments. Even though the act doesn't apply to the Pacific island 9,300 miles from Puerto Rico, analysts say it has set a precedent that could let other territories escape from obligations to bondholders.
S&P Global Ratings disagrees. It holds an A rating on the securities, reflecting Guam's ability to pay investors.
Promesa "currently only applies to Puerto Rico. The idea that it already applies to Guam, in our view, is not correct," said Paul Dyson, an analyst with S&P.
Business on 12/29/2016