By Jessica DiNapoli
NEW YORK, Sept 11 (Reuters) - Standard & Poor's Ratings Services on Friday lowered the credit rating on the University of Puerto Rico's existing revenue bonds one notch deeper into junk, days after the U.S. commonwealth released a sweeping report proposing spending cuts, including a reduction in subsidies at the university.
Puerto Rico's tax-backed debt was also downgraded by S&P after the island's fiscal and economic growth plan was released. The plan recommended a voluntary exchange offer and said Puerto Rico's "available resources may be insufficient to service all principal and interest on debt that has a constitutional priority."
The University of Puerto Rico's rating has moved together with the commonwealth's because it relies on money from the government, according to S&P.
"Although appropriations are not pledged to the bonds, they make up the largest portion of revenues available for operations," according to S&P. "Any delay or reduction in appropriations could have a serious effect on the university's operations."
Both the island's tax-backed debt and the University of Puerto Rico were downgraded to CC from CCC- by S&P. According to S&P, it rates debt CC when it expects default to "be a virtual certainty, regardless of the anticipated time to default."
(Reporting by Jessica DiNapoli; Editing by Dan Grebler)