NEW YORK--(BUSINESS WIRE)-- <\/p>\n
Fitch Ratings has affirmed the ratings on the following Virgin Islands Water and Power Authority (WAPA) bonds and removed the bonds from Rating Watch Negative: <\/p>\n
--$156.47 million senior lien bonds at 'BB'; --$109.34 million subordinate lien bonds at 'BB-'. <\/p>\n
The resolution of the Rating Watch primarily reflects the authority's improved near-term liquidity, following the sale of $69.14 million electric system bonds in April, with a portion of the proceeds used to repay working capital lines of credit and reduce the amount of an outstanding term loan. Fitch previously assigned the authority's $17.39 million electric system revenue refunding bonds series 2012A (tax-exempt) a rating of 'BB' and the $51.75 million electric system subordinated revenue bonds series 2012B (federally taxable) and 2012C (federally taxable) a rating of 'BB-'. <\/p>\n
The Rating Outlook on the outstanding bonds is Negative, which takes into account Fitch's continuing concerns about the authority's longer-term ability to address its high operating costs, increased leverage and more limited financial flexibility. <\/p>\n
SECURITY <\/p>\n
The senior bonds are secured by net electric revenues and certain other funds while the subordinated bonds are secured by net electric revenues on a subordinate lien basis. Lines of credit are junior to the payment of all obligations under the senior and subordinated resolutions. Debt service reserve funds are available for both series of bonds. The senior and subordinated bonds are not subject to cross-default provisions. <\/p>\n
KEY RATING DRIVERS <\/p>\n
SIGNIFICANT NUMBER OF RISK FACTORS: WAPA's financial ratios have declined significantly in recent years, due to higher oil costs, a softer economy, an increased dependence on short-term debt and growing sums due from the Water System. The 2012 bond financing and moderation of fuel prices lessens near-term financial liquidity concerns, but the ability of WAPA to consistently meet its financial obligations and stabilize its fiscal position remains uncertain. <\/p>\n
EXPOSURE TO OIL: The authority's generating plants are oil-fired, limiting the system's operating and financial flexibility. HOVENSA's decision to close its St. Croix oil refinery and end oil deliveries to the authority by year end 2012 will necessitate a change in oil suppliers; this is currently being addressed by senior management through a request for qualifications process to secure fuel supply by Jan. 1, 2013. <\/p>\n<\/p>\n
Continued here:<\/p>\n
Fitch Affirms Virgin Islands WAPA Sr Lien Bonds at 'BB' & Sub Lien Bonds at 'BB-'; Outlook Negative<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the ratings on the following Virgin Islands Water and Power Authority (WAPA) bonds and removed the bonds from Rating Watch Negative: --$156.47 million senior lien bonds at 'BB'; --$109.34 million subordinate lien bonds at 'BB-'. The resolution of the Rating Watch primarily reflects the authority's improved near-term liquidity, following the sale of $69.14 million electric system bonds in April, with a portion of the proceeds used to repay working capital lines of credit and reduce the amount of an outstanding term loan. Fitch previously assigned the authority's $17.39 million electric system revenue refunding bonds series 2012A (tax-exempt) a rating of 'BB' and the $51.75 million electric system subordinated revenue bonds series 2012B (federally taxable) and 2012C (federally taxable) a rating of 'BB-' Continue reading