Guam – The credit ratings agency Moody’s has changed the outlook of GovGuam’s Ba1 issuer rating from stable to negative.
The change in the outlook comes amid a fiscal crisis facing the island as lawmakers are scrambling to pass legislation to address a gaping $67 million hole brought on by the Trump Tax Cuts.
In its rating action, Moody’s says the outlook is “reflecting the possibility that its financial and liquidity positions could weaken further if timely, sufficient action isn’t taken to address the general fund revenue shortfall and restore long-term financial stability or if that revenue shortfall is greater than projected.”
Last week, Standard and Poors placed GovGuam on credit watch with negative implications for its general obligation and lease bond ratings for the same reason.
GovGuam isn’t the only institution to get that outlook change from Moody’s, the Guam Waterworks Authority also received a negative rating from Moody’s on its Baa2-rated water and wastewater system revenue bonds.
This change affects about $500 million in outstanding bonds. Moody’s says it is in conjunction with the change in outlook for GovGuam as a whole.
This negative outlook reflects “the possibility that although authority revenues are separate and distinct from the government’s general fund revenues, further deterioration on the part of the government could pressure the authority’s finances.”