LOS ANGELES — Moody's Investors Service upgraded the Guam Waterworks Authority to investment grade July 31.
Moody's advanced $376 million of revenue bonds to Baa2 from Ba1 and revised the outlook to stable citing strong financial performance.
Moody's cited the waterworks authority's record of obtaining steady rate increases, replacement of faulty meters, and cost savings from improved leak control for the upgrade.
Located closer to Asia than to the U.S. mainland, the 212-square-mile island has a population of 160,000. Its economy is tied mostly to tourism from Asia and the U.S. military. The authority provides water and wastewater services to the entire territory.
While bumping the rating two notches, Moody's pointed to the territory's small and concentrated economy, the vulnerability of system finances to volatile energy costs, above average debt levels, and uncertainty regarding the timing and cost of future regulatory requirements.
The stable outlook reflects the expectation that the authority will implement planned rate increases and that financial performance and debt service coverage will remain strong, Moody's analysts wrote.
The revenue bonds are secured by net revenues of the authority's water and wastewater enterprise.
On July 10, Fitch Ratings also boosted the waterworks authority to investment grade with a two notch upgrade to BBB-minus.
