S&P Global Ratings Credits Financial Stabilization, Revenue Improvements
Governor Lou Leon Guerrero welcomed the S&P Global Ratings upgraded outlook from negative to stable on the Government of Guam’s general debt and its ‘BB-‘ long-term rating on the bonds. The official S&P ratings for GovGuam’s general obligations and other associated financings were published by the bond rating agency Friday.
“While it is reassuring that our ratings went from negative to stable across all areas, we had hoped for a ratings upgrade and pressed hard to achieve as much,” said Governor Leon Guerrero. “Our fiscal team gave great effort to convince S&P of our stability and resilience, and we remain confident that our work is deserving of a ratings upgrade. This will not deter us from continuing to focus on fiscal discipline and responsibility as we support the revitalization of our economy.”
The stable outlook reflects S&P Global Ratings’ view of recent stabilization in GovGuam’s short-term finances, despite uncertainties in economic and revenue trends. It also reflects Guam’s stronger liquidity position supported by the significant influx of federal funds, as well as recent improvement in key general fund revenues.
GovGuam’s small and concentrated economy, which is heavily reliant on tourism, continues to face headwinds as a result of the COVID-19 pandemic and anemic recovery of its tourism sector.
However, Guam has shown relative stability in its finances with structural balances reported for fiscal 2020 and estimated for fiscal 2021. Furthermore, the general fund’s improved total cash balance supports current credit stability.