S&P re-rates all Guam bonds

by Ken Quintanilla

Guam -  After giving Guam's its highest credit ratings in the island's history for the Business Privilege Tax Bonds (better known as "the tax refund bond"), Standard & Poor's once again re-rated all of the Government of Guam's bonds over the past two decades, not only upgrading one but affirming the rest.

Apparently, flat is the new up - because despite the global climate that has resulted in several downgrades for other countries, Guam has remained stable relative to credit ratings, which is proof that the Calvo Administration is on the right track in achieving fiscal stabilization. According to Governor Eddie Calvo's director of communications Troy Torres, a report by S&P cited its confidence in the Administration's fiscal reform and leadership believing GovGuam's efforts to manage its budget are "positives for future credit quality."

"As you saw that through the release of the tax refunds, through aggressive fiscal reform that is going on and that continues until things are perfect and you see it in the affirmation of Standard & Poor's of the governor's fiscal policies," he said.

While in San Francisco a few months ago marketing the Series 'B' bond to pay out millions in tax refunds, the fiscal team optimized its time and saw the rating agencies on other credits. The results - the Section 30 credit bonds were upgraded two notches from a 'BBB-' to a 'BBB+ with Stable Outlook', providing some indication to investors that there's an upside in buying Guam paper.

Karl Pangelinan, administrator for the Guam Economic Development Authority, told KUAM News, "So what that means is that if we do, in fact, decide to go back out and restructure some of that debt specific to the Section 30 money, what that could result in is a lower rating or lower interest rate for Guam."

Other bonds re-rated with a stable outlook included the General Obligation Bond, the Hotel Occupancy Tax Bond, the Certificate of Participation Bond and the Compact Impact Credit. Ultimately, this affirmation could translate to much better future rates should GovGuam go out for any other subsequent financing.

Said Pangelinan, "What is means to Joe Q. Public is really down the line when we decide to go out for additional financing, at the end of the day all of these good news means we could save money in the future."

Although the ratings are positive news, Pangelinan says the works not over and there's still a long road ahead in stabilizing the government's finances.