The U.S. Virgin Islands government plans to reduce the size of its capital spending budget by 30% to 40%.
The reduction would be from the levels that the government had been planning, according to Virgin Islands Senate President Neville James.
The sale of a bond was to finance its capital spending budget. That budget's reduction will reduce the size of any bond it sells.
In July, Virgin Islands Department of Finance Commissioner Valdamier Collens said that his government planned to sell a $1 billion bond in September.
Moody's Investors Service downgraded the Virgin Islands' rum tax bonds by six notches on June 30 to junk and Fitch Ratings put several of the islands' bonds on negative watch on July 6. Moody's now has the rum tax bonds at B1 and B2.
James leads the Democratic Party contingent in the Virgin Island Senate, which controls 11 of the 15 seats.
Virgin Islands governor Kenneth Mapp is a registered Republican but ran as an independent in the 2014 election. Virgin Islands' news sources say that he will request a 30% to 40% smaller capital budget.
The islands' new fiscal year starts on Oct. 1.
According to The Virgin Islands Daily News, James said that the cut in capital spending was a result of the ratings agencies' actions.
According to the VI Consortium news web site, Collens said the increased rates investors are now seeking to buy the islands' bonds will preclude the islands' planned debt refinancing. At this point any refinancing would be at a substantially higher interest rate, he said.
