$30M landfill bond gets Ba1 rating with stable outlook
Moody’s Investors Service has assigned a Ba1 rating, with a stable outlook, to the government of Guam’s $30 million general obligation bond.
The announcement was made today and follows Gov. Lou Leon Guerrero leading bond rating presentations in San Francisco last month.
“The Moody’s rating is the highest rating on Guam’s GO bonds since 2002,” according to a press release from Adelup.
Proceeds from the bonds will be used to finance a new cell at the Layon landfill and will be repaid using Guam Solid Waste Authority’s existing revenue stream.
“The Ba1 rating reflects the stabilization of the government's financial position as a result of actions taken to offset the loss of income tax revenues triggered by federal tax cuts enacted in December 2017,” according to Moody’s release.
“It also incorporates Guam’s small and concentrated economy, significant accumulated general fund deficits and debt levels which, while below those of other territories, are significantly above U.S. state medians.”
Moody’s said Guam generally has positive economic trends and a good economic outlook, and “a favorable pension funding situation are also reflected in the rating.”
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“Fiscal discipline is the top priority of my administration,” Leon Guerrero said. “The positive rating from Moody’s indicates recognition of the progress we are making and continue to work on daily. The efforts of my entire fiscal discipline team is to stabilize government finances, reducing and eventually eliminating the deficit while at the same time creating cash reserves through the establishment of a Rainy Day Fund.”
Meanwhile, credit rating agency Standard & Poors (S&P) has also affirmed GovGuam’s GO bonds with a stable outlook with a BB- rating.
According to S&P, “The stable outlook reflects the government of Guam’s slightly improved financial profile, albeit with a deficit in fiscal 2018, and commitment to improving operations and setting aside reserve funds as part of its proposed fiscal 2020 budget. Multiple years of structural balance along with continued improvement in GovGuam’s accumulated general fund deficit and improved liquidity may lead to a higher rating.”
“Both rating agencies acknowledge the challenges our government continues to face with the federal Tax Cuts and Jobs Act impacts and our ability to deliver essential services in spite of the fiscal quagmire brought on by this federal initiative,” Adelup said in a press release.
S&P said the outlook reflects the government of Guam’s slightly improved financial profile, albeit with a small deficit in fiscal 2018, and commitment to improving operations and setting aside reserve funds as part of its proposed fiscal 2020 budget.
“We appreciate the positive ratings by both Moody’s and S&P,” the governor said. “I am excited that we are one step closer to taking full control of Guam’s Solid Waste Collection and Disposal program which has been under federal receivership for over a decade without having to raise tipping fees and with no need to draw on the general fund.”