Boding well for the V.I. Government’s plans to issue bonds to fill a budget gap this year, this week the national bond rating agencies Fitch Ratings and Standard & Poor’s each affirmed their investment grade bond ratings on the Public Finance Authority’s Matching Fund Gross Receipts Taxes Bonds. Earlier this week, Government House proposed more than $100 million in new bond debt, to fill a $30 million budget deficit, to prop up the territory’s hospitals with another $30 million, and to pay other pressing bills. (See Related Links below)
For now, Fitch Ratings has confirmed its BBB rating and S&P confirmed its BBB+ rating on those bonds. Also, Standard & Poor’s assigned a first time rating of A to the PFA’s proposed issuance of federal grant anticipation bonds, secured by a pledge of federal and local transportation revenues. The government is considering about $70 million in new GARVEE bonds, which do not hurt the territory’s budget because they are secured and paid through federal grants.
Gov. John deJongh Jr. said in a statement Tuesday these ratings affirm the stability of the bond ratings and will reaffirm investor confidence in the bonding program. “I would draw attention to two particular aspects of these rating actions. First, the GARVEE rating is the highest rating we have yet achieved and, together with the reaffirmation of the GRT ratings, emphasizes that even as we have been dealing with extraordinarily difficult financial circumstances, we have continued to assure investor confidence and maintain market access.”
“Second,” deJongh said, “it is important to note that even as Fitch sustained our bond rating, they lowered what they call their ‘shadow’ general rating on the territory. In doing so, Fitch is recognizing what I have emphasized over and over: we must continue to take difficult steps, to make hard but necessary choices to regain the financial stability that we lost in the wake of the Great Recession and the closing of Hovensa."
DeJongh said, "It was not our preference to borrow once again for working capital, but we have not yet done all that we must do to assure our future stability. We are not out of the woods, but we are on a prudent path forward.”
Finance Commissioner and PFA Executive Director Angel Dawson Jr. said the government expects "widespread interest in these transactions.”