Hernando Montero's Palm Beach Post Weekly Column: Virgin Islands Cuts Ties With Rating Agencies

Monday, Sep 18, 2017

Hernando Montero-Salazar
Stoever Glass & Co., Inc.
Phone: (212) 952-1910
E: hmontero@stoeverglass.com

For years, investor demand drove the sale of Virgin Islands’ (USVI) triple tax-exempt debt. Bond issues typically finance infrastructure and capital projects. But, in the case of Puerto Rico and the Virgin Islands, officials increasingly relied on deficit financing to cover budget deficits and government operations.

This resulted in several downgrades of USVI ratings that scared away investors and forced the government to cancel a planned bond offering in January, costing the Virgin Islands market access and the ability to borrow funds to pay for basic government operations. As a stopgap, USVI diverted its workers’ pension contributions.

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