(Bloomberg) -- Puerto Rico’s general-obligation debt, already graded one step above junk, may be cut by Moody’s Investors Service if the island commonwealth’s finances continue to deteriorate and it isn’t able to access credit markets soon.

The decision affects $52 billion of rated debt, Moody’s said. Puerto Rico’s securities are held by more than three- quarters of mutual funds that invest in municipal bonds, according to Morningstar Inc. in Chicago. A rating cut may lead funds to sell some of those holdings.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.