Delay in Puerto Rico's financial statements could count as default -Moody's

Puerto Rico's recent announcement that it will miss a May 1 deadline to file 2014 financial statements could count as a default if left unresolved for more than 30 days, according to a research note from Moody's Investors Service on Thursday.

"Legal documents of that transaction stipulate the GDB (Government Development Bank) will use 'commercially reasonable efforts' to post audited financial statements, also by May 1 each year," Moody's said.

"The failure to make such efforts to publish annual financial documents might constitute a default if left uncured for 30 days under the terms of the loan agreement."

Puerto Rico will not be able to file audited 2014 financial statements by the May deadline, the GDB said in a bondholder filing on Tuesday.

Moody's said that while the delay was a credit negative it did not in itself alter its view of Puerto Rico's finances, although it did raise questions about the government's commitment to increased transparency.

"The commonwealth plans to issue as much as $2.95 billion of bonds, backed by increased petroleum products tax revenues," Moody's said. "There is a risk that financial data challenges will impede preparation of disclosure documents needed for bond sales that the government is relying on."

Moody's rates Puerto Rico Caa1 negative, a mid category junk rating.

(Reporting by Edward Krudy; Editing by Meredith Mazzilli)

Delay in Puerto Rico's financial statements could count as default -Moody's

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