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HomeNewsLocal newsMoody's Rating Agency Places WAPA on 'Review for Downgrade'

Moody’s Rating Agency Places WAPA on ‘Review for Downgrade’

Moody’s Investors Service placed two types of V.I. Water and Power Authority bonds on review for downgrade at the end of March, citing massive overdue government utility bills and "a supportive but slow regulatory process" by the V.I. Public Services Commission.

WAPA has about $127 million in electric system revenue bonds outstanding, rated at Baa3, and about $100 million in subordinated electric system revenue bonds, rated at Ba1, according to Moody’s.

It has outstanding credit lines of around $23 million that mature in June, which Moody’s says are "likely" to be extended.

The ratings agency is concerned about WAPA’s "weak financial profile, historically slow payment patterns of (WAPA’s) governmental customers, which constrains (WAPA’s) cash flow generation."

Also WAPA has trouble getting "timely recovery of costs" because "unlike the majority of publicly owned electric utilities in the U.S., … WAPA’s rates are subject to approval by the Virgin Islands Public Service Commission with an approval process that can be slow," Moody’s officials wrote in a statement announcing its new position.

Government agencies owed up to $42 million to WAPA in recent months. (See Related Links below)

Moody’s also cited the V.I. economy’s "sluggish growth, high unemployment and a narrow local economy that is dependent on discretionary tourism."

On the plus-side, Moody’s pointed to WAPA’s converting its generators to burn propane and other fuels instead of just fuel oil and to recent rate changes and the government’s efforts to reduce outstanding bills, "which reached an all-time high in Fiscal Year 2015."

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