by Bill Kossler, St. Croix Source
The credit rating agency Moody’s Investor Services downgraded all V.I. government debt yet again Jan. 31, saying the territory is “highly likely” to be unable to make debt payments without restructuring. Moody’s also said the territory’s pension system may collapse “much sooner” than 2023.
V.I. officials have told the Legislature the territory has a roughly $450 million deficit this year, up from the pre-hurricane annual $170 million structural deficit out of a locally funded budget of around $850 million. With $65 million in revenue assistance in the form of a federal disaster assistance loan, the V.I. Government should be around $385 million in the hole this year, although the actual number fluctuates as revenues and expenses fluctuate.
A year ago, Moody’s adjusted USVI senior lien bonds down three full notches from the “speculative” junk rating of B1 to Caa1, which the agency terms “bonds of poor standing.” The Jan. 31 downgrade takes them down two more notches to Caa3. Moody’s has only two lower ratings: Ca, which it terms “highly speculative, or near default” and C- “bonds typically in default, little prospect for recovery of principal or interest.”