Moody's is warning Puerto Rico that it may downgrade their current A3 rated "general obligation bond", which is currently just one step above a "below average status".
With a further downgrade, Puerto Rico's bond is dangerously close to becoming a junk bond.
The comes just prior to the Government Development Bank of Puerto Rico issuing a $500 Million unsecured note for sale (May 11th).
One advantage for investors in Puerto Rican bonds has been their tax exempt status, which shelters them from federal, state and local taxes (triple tax exempt)
Source: Wall Street Journal