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Fitch places Puerto Rico banks on Rating Watch Negative

Fitch Ratings on Oct. 5 placed the ratings of two Puerto Rico-based banks on Negative Watch, due to the uncertainty of Hurricane Maria's impact on the island.

Impacted are First BanCorp.'s long-term issuer default rating of B-, short-term issuer default rating of B and viability rating of b-, as well as Popular Inc.'s long-term IDR and senior unsecured rating of BB-, short-term IDR and short-term debt rating of B, its "bb-" viability rating and B- preferred stock rating.

The rating agency said the hurricane is expected to worsen the banks' already-weak operating environment. The destruction to homes, businesses and other property could make it harder for the banks to maintain their asset quality, earnings and deposit funding metrics. It could also complicate the commonwealth's push "to reverse outward migration, generate sustainable economic growth, and address its fiscal and debt imbalances."