Virgin Islands PFA Cut to by S&P

S&P Global Ratings said it has lowered its rating on Virgin Islands Public Finance Authority's (VIPFA) senior-lien matching fund notes to BB from BBB and has lowered its rating on subordinate-lien matching fund notes, issued for the U.S. Virgin Islands (USVI), to BB-minus from BBB-minus.

At the same time, S&P said it assigned its BB long-term rating to VIPFA's series 2016A senior-lien capital projects and working capital notes and its BB-minus to its series 2016B subordinate-lien working capital notes, issued for the USVI.

S&P also lowered its rating on Virgin Islands Public Finance Authority's (VIPFA) senior-lien matching fund notes to BB from BBB and has lowered its rating on subordinate-lien matching fund notes, issued for the U.S. Virgin Islands (USVI), to BB-minus from BBB-minus.

"The downgrade reflects weakened economic conditions, declining coverage and revenue trends, and continued reliance on this revenue source to finance operating deficits," said S&P Global Ratings credit analyst John Sugden. "It also reflects our view of a closer linkage between the territory's general fiscal condition and the repayment of the bonds, especially during times of significant fiscal distress", he added.

The outlook is negative, reflecting the continued significant economic, financial, and budgetary challenges the territory currently faces, absent corrective action, could lead to increased deficit financing and, over time, inadequate capacity or willingness to meet its financial commitment to its obligations, especially if market access becomes constrained, S&P said.

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