NEW YORK--(BUSINESS WIRE)-- <\/p>\n
Fitch Ratings takes the following actions on the ratings of the U.S. Virgin Islands: <\/p>\n
--Affirms the 'BBB' rating for the U.S. Virgin Islands (USVI) Public Finance Authority (VIPFA) bonds (Virgin Islands gross receipts tax (GRT) loan note) (senior lien); <\/p>\n
--Affirms the 'BB' implied general obligation (GO) bond rating for the USVI. There are no outstanding stand-alone GO bonds of the USVI. <\/p>\n
The Rating Outlooks remain Negative. <\/p>\n
SECURITY <\/p>\n
The GRT revenue bonds issued by VIPFA are secured by a pledge of GRT collections from the USVI deposited to the trustee for bondholders prior to their use for general purposes. The bonds also carry a GO pledge of the USVI. <\/p>\n
KEY RATING DRIVERS <\/p>\n
GRT SECURITY INSULATED FROM GOVERNMENT OPERATIONS: Bonds issued by the VIPFA and secured by the GRT have been insulated from general fund operations through a collection process that allocates pledged revenues to a separate escrow account. Debt service coverage remains satisfactory, even through stress scenarios. The USVI's action to raise the rate in fiscal 2012 appears to have offset the severity of declines due to the loss of Hovensa, the USVI's former largest employer and taxpayer; however, the linkage to the weak USVI economy maintains the rating Outlook at Negative. In addition, over-leveraging of the GRT to support general fund operations would weaken credit quality for these bonds. <\/p>\n
ECONOMIC AND FINANCIAL STRAIN: The below investment-grade implied GO rating and Negative Outlook reflects significantly strained fiscal operations and the intractability of longer-term fiscal challenges that are now compounded by severe economic difficulties from the closure of Hovensa. <\/p>\n
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Originally posted here: <\/p>\n
Fitch Affirms U.S. Virgin Islands GRT Bonds at 'BBB' and Implied GO at 'BB'; Outlooks Negative<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" NEW YORK--(BUSINESS WIRE)-- Fitch Ratings takes the following actions on the ratings of the U.S. Continue reading