The world’s largest asset manager, which oversees more than $100 billion in municipal bonds, warned of the potential cut during a media presentation in New York on Thursday, according to reports by Bloomberg and Bond Buyer.

Since December, Moody’s Investors Service, Standard & Poor’s and Fitch all lowered the Puerto Rico government’s general obligation (GO) bond debt to just one notch above junk, or noninvestment grade, and have warned of the potential for further downgrades. The three Wall Street ratings agencies all grade Cofinas solidly within investment level. Most analysts say preserving its investment-grade rating will depend on hitting revenue targets during the current 2014 fiscal year (which started July 1) and an improvement in the economy.

Puerto Rico’s Government Development Bank hosted a presentation Tuesday to provide an update on the island’s fiscal and economic development progress. The administration of Gov. Alejandro García Padilla has been working overtime to head off a potential credit downgrade to junk level, touting an aggressive public pension reform and more than $1.4 billion in new revenue measures aimed at closing chronic budget gaps. It has also outlined a five-year plan for achieving a more diversified, knowledge-driven economy as the island struggles to pull out of a marathon recession dating back to 2006.

Puerto Rico’s economy pulled pack sharply in August as a sustained slide extended to 10-straight months, unemployment (13.9 percent) has ticked up for two straight months and the island continues to shed jobs and population.

The Government Development Bank’s Economic Activity Index (EAI) for August plunged 5.4 percent from the same month in 2012. The cumulative value for the first two months of fiscal year 2014 (July-August) showed a reduction of 5.2 percent with respect to the corresponding figure of fiscal 2012.

The GDB-EAI had returned to growth in December 2011 for the first time since Puerto Rico’s recession began in 2006. It showed small but consistent year-over-year gains for nearly a year before beginning to retreat again last October. Since then, it has been on a steadily steepening decline: falling 0.7 percent in November, 2012, 1.3 percent in December, 2012, 1.8 percent in January, 3.1 percent in February, 3.1 percent in March, 3.5 percent in April and 3.4 percent in May, 4.5 percent in June and 5 percent in July.

The García Padilla administration is forecasting economic growth of 0.2 percent for the current fiscal year, a projection that was used as the basis of the fiscal year 2014 budget. Most economists are predicting continued contraction during fiscal 2014, which began July 1.

Economist Gustavo Vélez, chairman of Inteligéncia Económica, is predicting a decline of nearly 1 percent; Joaquín Villamil, chairman of Estudios Técnicos, is predicting a contraction of at least 1 percent; and Vicente Feliciano, president of Advantage Business Consulting, is expecting an even larger shrinkage of about 2 percent.

cbnews@caribbeanbusinesspr.com; cbprdigital@gmail.com

El banco neoyorquino JPMorgan Chase & Co. ha acordado el pago de cerca de $4,000 millones a las autoridades de EE.UU. por haber desinformado a los gigantes hipotecarios Fannie Mae y Freddie Mac sobre la calidad los activos que les vendió antes del estallido de la burbuja hipotecaria.