S&P Global Ratings said it has lowered its ratings on Virgin Islands Water and Power Authority's (WAPA) senior-lien electric system revenue bonds to CCC-plus from BB-plus, and its rating on the authority's subordinate-lien electric system revenue debt to CCC from BB-minus.

At the same time, S&P said it placed the ratings on CreditWatch with negative implications

The downgrade reflects its view of the electric system's weakened business prospects in the aftermath of Hurricane Irma, which struck the U.S. Virgin Islands (USVI) Sept. 6.

"We believe the hurricane's adverse impacts on the local tourist-dependent economy; its impact on the USVI government, a significant customer and the source of materials receivables on WAPA's balance sheet; the authority's already-weak financial position; and its weak liquidity make the electric system vulnerable to nonpayment in the event of continued adverse business, economic, and financial conditions," said S&P credit analyst Peter Murphy.

The rating action affects $127 million of senior-lien bonds and $96 million of subordinate-lien debt.

A damaged SUV sits atop wreckage from a Virgin islands restaurant destroyed by Hurricane Irma.
A damaged SUV sits atop wreckage from a Virgin islands restaurant destroyed by Hurricane Irma. Bloomberg News

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