S&P Gives Same A- Rating to Two Older GWA Bonds That It Gave to Recently Issued 2013 Series Revenue Bonds


Guam – Standard and Poor’s has given GWA’s Series 2005 and Series 2010  Revenue Bonds a rating of A- rating with a stable outlook.

The rating on these older, already issued Revenue Bonds was issued by S&P at the request of GWA “for a postsale rating,” according to S&P’s “Rationale” statement.

READ the S&P  “Rationale” for the A- rating HERE  

The 2005 and 2010 Revenue Bonds were not previously rated. However Standard & Poor’s has now placed them “on parity” with the series 2013 bonds that the authority recently sold. S&P states that the A- rating reflects their “opinion of the authority’s general creditworthiness.”    

Among the factors cited by S&P for their A- rating are:

* A financial turnaround that has helped bolster and stabilize debt service coverage (DSC) and will likely lead to improved working capital levels as well;
* A supportive relationship with the territory’s Public Utility Commission, including an October 2013 approval of five years of future rate increases, all based on an assumed 1.75x annual DSC
* Minimal direct financial interaction with the general government (GovGuam; BB-/Stable GO rating), including no dependence on GovGuam as a customer and a closed flow of funds that preclude any transfer of surplus net revenues to GovGuam; and
* Significant progress to date on many of its mandated capital improvement projects.

GWA is under a federal court order to upgrade its water and waste water systems.

The Series 2005 Revenue Bonds issue amounts to $103,830,000.00 of debt.  The Series 2012 Revenue Bonds totaled $118,825,000 of debt.

READ the letter from Standards and Poor’s to GWA on the A- Rating for the 2005 and 2012 Revenue Bonds

The A- rating for the Series 2005 and 2012 revenue bonds is the same A- rating given by S&P to GWA’s recently sold 2013 Revenue Bonds

READ the PNC report on the November 5th release from S&P on the A- rating given to GWA’s 2013 Revenue Bonds HERE   

READ the release from the Governor’s Office below:

“Guam has a bright future ahead, and we worked hard to get there.  While Ray and I put the government’s finances back together, we asked for your patience and thanked you for your sacrifice.  The continued positive news from Wall Street speaks to their confidence in our economy growing. This administration is committed to doing what is right for our people.  The trust you place in us is a responsibility Ray and I take seriously.  Wall Street sees our commitment to growing this economy and to our families, and its response has raised our stocks in the global financial markets. The men and women of GWA should be commended for helping to shape this story. The continuous improvement in water services speaks to their commitment to excellence.” – Governor Eddie Baza Calvo

GWA earns high rating for previously unrated bonds                                                      
Guam Governor Eddie Calvo received some unexpected good news right before Christmas: Standard & Poor’s decided to attach its A- rating on Guam Waterworks Authority’s new bond onto two older bonds that were never rated.

When bonds are upgraded, they increase the chance of higher ratings for future and existing bonds.  And when the government spends less on these bond agreements, it has more money to pay for important obligations like tax refunds, pay raises, and vendor payments.

Rating shows that Guam is headed in the right direction  
This is an unexpected move from one of Wall Street’s top bond rating firms.  The rating is also significant for Guam and for companies that buy Guam’s bonds for several reasons.  First, the value of bonds purchased from the GWA bonds of 2005 and 2010 significantly appreciated because of the rating.  Second, this is another indication to the global financial markets that Guam is a good investment.

This news boosts our profile on Wall Street—a profile with proven stability in government finances and high potential from a growing community that’s headed places.

Fiscal stability a result of work from the beginning of administration                
Since coming into office in 2011, Governor Calvo and his fiscal policy team put best practices in place, sold bonds at record low interest rates to pay the 20-year-old debt owed to the people of Guam, and improved the financial stability of our government.

This commitment to fiscal discipline eliminated the deficit, paid our debts to our people and employees, paid out all tax refunds for TY2012 without the use of any special financing, and created a true tax refund reserve for the first time in recent memory.

The fiscal stability policies instituted by Governor Calvo paid not just tax refunds, but also increments, raises, merit bonuses, promised compensation, and back-pay.

Guam’s economy on the upswing                                                                          
The rise in Guam’s financial stock is also due to the island’s growing economy and our bright economic future.  Our tourism industry is seeing back-to-back banner years for arrivals.  Our new Russian market frequently sees triple digit increases in arrivals every month.  Meanwhile, visitors from Taiwan and Korea continue to arrive in record numbers.

This increase is tourist activity has been met with an increase in investment to Guam.  A number of international restaurant franchises are opening soon, and a major fast-food franchise opened just this month.  The airport is seeing millions of dollars worth of improvements through its new duty-free vendor.  A leading international luxury-brand hotel is opening, and a long-time vacant hotel has reopened.

All this present economic activity will be met with one of the most significant times in Guam’s history: the military buildup.  The passage of this year’s National Defense Authorization Act will pave the way for about half a billion dollars of military construction projects to Guam.  Once President Obama signs the measure, Guam will have the chance to plan for a new chapter of economic growth.  The planning and building to host of Marines relocating from Okinawa will finally begin—giving Guam yet another boost to our economy and to our attraction for Wall Street investment.

Recent news supports administration’s work                                                                    
This is the latest in a series of great news from New York that boasts Guam’s economic future and Governor Calvo’s leadership.

Just last month:
*Bloomberg published a story boasting Guam’s bright future in comparison to Puerto Rico’s slide on the bond market.
*An interview on Standard & Poor’s website said, unequivocally, “In our view, the current management team (Governor Calvo & his fiscal team) gives Guam its best chance in years to improve its credit.”
*When rating GWA’s latest bonds, S&P reported, “As the economy continues to grow both directly and indirectly from the buildup and growth in the tourism sector, income indicators are expected to grow as well.”
* When rating GWA’s latest bonds, Fitch Ratings reported, “…a recovery is evident with fiscal [year] 2013 marking the second highest year for visitor arrivals and hotel occupancy rates at 85%, the highest in more than a decade.”

GWA Bond Offering Gets an “A-” Rating From S&P; Stable Outlook

Guam News – Guam News

Guam –  GWA Tuesday got an “A-” rating from S&P, along with a Stable Outlook for the GWA Series 2013 water and wastewater system revenue bonds.