Fitch Ratings said it has downgraded the ratings on the following U.S. Virgin Islands (USVI) Water and Power Authority (WAPA) revenue bonds: $118,850,000 electric system revenue bonds, series 2012A, 2010A, 2010B, 2010C, 2003 to CCC from B-plus; and $96,800,000 electric system subordinated revenue bonds, series 2007A, 2012B, 2012C to CCC from B.
The rating outlook remains negative.
The rating downgrade reflects the heightened credit risk as a consequence of WAPA's continued inability to gain regulatory approval of rate relief needed to address its exceptionally weak cash flow and liquidity, Fitch said. A rate increase that was authorized in January 2017 but then subsequently rescinded by the Virgin Islands Public Service Commission (PSC) evidences an unsupportive relationship that compounds the authority's consistently low unrestricted cash reserves (estimated at five days of cash on hand), exceptionally high government receivables and fully depleted borrowing capacity under its lines of credit.
