The United States Virgin Islands
Office of the Governor
Charlotte Amalie U.S.V.I. 00802
STANDARD & POOR’S GRANTS INVESTMENT GRADE RATING TO U.S.V.I. GENERAL OBLIGATION BONDS
A Stable Economic Outlook, Improving Financial Operations and Strong Economic Ties to the US Cited as Key to Positive Credit Rating Upgrades its Rating for Territory’s Gross Receipts Tax and General Obligation Loan Note Bonds
(Charlotte Amalie, USVI – September 11, 2006) The U.S. Virgin Islands received its second investment grade bond rating from Standard & Poor’s, one of the world’s leading rating agencies. The announcement by Standard & Poor’s granting its BBB- rating follows the recent announcement by Moody’s Investors Services to grant the territory its Baa3 investment grade rating.
Standard & Poor’s Rating Services assigned its investment grade rating to the government’s General Obligation (GO) bonds. S&P also issued a favorable report on the V.I. Public Finance Authority’s gross receipts tax and GO loan note bonds, raising the rating to BBB+ from BBB based upon the solid debt service coverage. (Download the US VirginIslands SP General Obligation Bonds document)
Governor Charles W. Turnbull said, “We are very pleased that Standard & Poor’s has recognized the turnaround in the financial conditions of the Virgin Islands. The investment grade bond rating we have received from the key rating agencies sends a message to the financial markets that economic expansion and private sector employment will continue, and the Virgin Islands is great place to live, work and invest.
“Thanks again to the Virgin Islands Senate for their commitment to financial stability over the past eight years. And to my financial team and advisors from Banc of America Securities, who have worked tirelessly over the past eight years to turn around this economy, achieve consecutive year balanced budgets, create surpluses and steward the great assets of the Virgin Islands, preparing it for continued growth and stability in the years to come.”
According to the report, the rating reflects the government’s following strengths:
Strong political and economic ties to the U.S., which provides monetary, legal and regulatory stability Broad revenue-raising and budget-control authority Improving financial operations Manageable GO debt burden, which is limited to 10% of the territory’s assessed valuation
A General Obligation bond credit rating enables the government to seek municipal financing at the most favorable interest rates and provides the government the ability to issue bonds independent of specific tax revenues such as gross receipts taxes. An investment grade bond rating also encourages major lenders and vendors to extend credit to the territory under better terms.
The fiscal condition of the government has steadily improved, with five years of positive fund balances. Tax revenues have never been stronger, with corporate income tax up 250% since 2001, individual income tax up 16% and gross receipts tax increasing over 25%. Matching fund revenue exceeded $75 million in 2005, more than doubling since 1994. It is expected to exceed $90 million by 2009. Gross Territorial Product increased 12%, while per capita income rose 10%. Total exports doubled, with large increases in petroleum and rum exports.
Kent Bernier, Director of Administration of the Public Finance Authority, said, “We are very excited and proud to receive this investment grade rating. It is the result of the hard work and commitment of the people of the Virgin Islands. We must remember to continue to work hard to maintain and improve the credit rating, ensure financial stability, address the unfunded liabilities in the pension fund, and continue fiscal discipline and financial reporting.”
The financial team included Bernice Turnbull, Finance Commissioner; Ira Mills, Budget Director; Nathan Simmonds, Director of the Office of Fiscal and Economic Recovery; Louis M. Willis, Director of the Bureau of Internal Revenue; Frank Schulterbrandt, CEO, Economic Development Authority; Roy Martin, Tax Assessor; Paul Paquin, Deputy Solicitor General; Lauritz Mills, Bureau of Economic Research Director; Keith Richards, Capital Projects Director; Karen Andrews, Director, Office of Collective Bargaining; Harold Baker, Director of Emergency Management, as well as financial advisors from Banc of America Securities, Managing Director Margaret Guarino and Vice President Lawrence Soule; and William O’Connor, Bond Counsel from the law firm of Buchanan Ingersoll.
S&P reports available at www.GovernorTurnbull.net
Kent Bernier, Virgin Islands Public Finance Authority, (340) 714-1635
Lonnie Soury (212) 414-5857, (917) 519-4521, Lsoury@aol.com