Fitch kept WAPA bonds on negative watch after Legislature approved oversight bill

Fitch Ratings said on May 24, 2021, that the prospect of additional government oversight of the Virgin Islands Water and Power Authority was a factor in keeping the utility’s bond ratings at distressed levels.

The statement followed the 34th Legislature’s approval of Bill No. 34-0021, which would have made the Public Services Commission a semi-autonomous agency and required WAPA to hire a turnaround company. Fitch said the measure increased concern that added oversight could hurt operations and raise the authority’s vulnerability to default.

Fitch said WAPA remained on Rating Watch Negative. It rated the utility’s $91.49 million electric system revenue bonds and $86.40 million electric system subordinate revenue bonds at CCC, and also assigned a CCC Issuer Default Rating.

Fitch said the ratings reflected heightened default risk tied to weak cash flow and liquidity. Based on unaudited information provided by WAPA, Fitch said the authority had modest cash on hand and borrowing capacity insufficient to cover scheduled maturities over the long term.

Gov. Albert Bryan Jr. vetoed the bill in the week before Fitch’s statement. In his veto letter to Senate President Donna Frett-Gregory, Bryan said the bill’s requirements for a turnaround company, additional staffing and expanded PSC jurisdiction were unfunded mandates that could not be supported with existing WAPA or PSC funds.

Official source: https://www.vi.gov/fitch-says-possibility-of-additional-oversight-on-wapa-board-creates-doubt-that-keeps-utilitys-bond-rate-downgraded/