Moody’s may push Guam further into junk

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Moody’s Investors Service is considering downgrading Guam’s Ba1 rating and the ratings of most of the island’s authorities.

Guam’s government has $1.3 billion of net tax-supported debt outstanding, however, the rating is on $30 million of general obligation bonds. Most of the rest of its debt is unrated. Late in March, the agency had put several of the island's agency ratings on watch as well.

Moody’s put the rating on review out of a concern about the reduction in tourists from Asia visiting the island due to the spread of COVID-19 around the world and how the decline may affect the government’s revenues.

On Monday, Moody’s Senior Vice President Ken Kurtz said in the two weeks since putting the rating on review, “The evaporation of tourism continues.”

On March 25 Kurtz said in his determination of the rating that he would be reviewing the federal government’s aid to the territory.

On Monday he said in the Coronavirus Aid, Relief, and Economic Security Act territories got less than the states. He said the reimbursement for healthcare was less and that its federal Medicaid relief doesn’t benefit the territories in the same way it benefits the states.

Kurtz said he would be looking to see if future federal aid packages have more money for Guam.

Moody’s put the Ba1 rating on the government on review on March 25, its Baa2 rating on the Guam Waterworks on review on March 25, and its Baa2 ratings of the Guam Port Authority and of the Guam Power Authority senior bonds on review on March 30.

The ratings agency also on March 30 put a negative watch on its Baa2 rating of Guam’s Antonio Won Pat International Airport Authority senior revenue bonds.

In all these actions Moody’s cited the decline in visitors as key to the reviews or outlook. In its review on the Power Authority, it also cited concern about reduced revenue from commercial customers.

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