Moody's downgrades $48B of Puerto Rico's debt, following S&P's downgrade last week

Economic IndicatorsAssociated Press

Moody's Investors Service has downgraded $48 billion worth of Puerto Rico debt as the U.S. territory struggles to generate more revenue.

The credit rating agency said Thursday that tax revenue shortfalls could worsen Puerto Rico's liquidity issues. It also warned that the U.S. territory might default on its debt in the next two years.

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Moody's said that proposed tax reforms currently being debated by Puerto Rico legislators could have an adverse political effect that might affect bondholders.

Standard & Poor's downgraded the island's general obligation bonds last week.

Puerto Rico holds $73 billion in public debt, and the current administration is pushing to overhaul the tax system to help generate more money.