Credit watch follows GovGuam's limited cash flow - KUAM.com-KUAM News: On Air. Online. On Demand.

Credit watch follows GovGuam's limited cash flow

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GovGuam's growing financial woes have caught the attention of international bond ratings agency Standard and Poors.  S&P has placed a credit watch on about $187 million in bond debt. GEDA Administrator Jay Rojas says none of the current bond issues will be impacted, but a ratings downgrade could raise the costs of future bond borrowing.

"The one thing that we're really concerned about is that we look at this new issuance for the port, when we do go out to the market for the Port Authority, we're going to have quite a few answers, quite a few questions that we're going to have to answer," said Rojas.

In a news release, S&P says the credit watch follows  the government's disclosure that its cash flow will be extremely constrained. It went to say that if it doesn't receive evidence that the rating considerations are being addressed, it will likely lower the ratings.

Rojas added, "Last week, we did actually speak to two ratings agencies that did have questions just based on the current environment out there. And as you know, there's been a lot of news about the governor trying to fix this problem and the legislature not really reacting. They take a look at the numbers, they take a look at the current environment, they have a much better overview of what's happening in the market and other municipalities that are out there. What they do is what they do."

The S&P statement was also critical of the government's financial position which it described as weak. It went on to write that "Guam has a history of structural imbalance in its General Fund, including recurring deficits, a very large negative General Fund balance, and massive long-term liabilities."

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