Kroll assigns preliminary BBB rating to Virgin Islands special-purpose bonds tied to GERS refinancing plan

Kroll Bond Rating Agency assigned a preliminary long-term BBB rating with a stable outlook to bonds planned for sale by the Virgin Islands through the Matching Fund Special Purpose Securitization Corporation, according to a Government House statement published March 22, 2022.

The corporation was created under Act No. 8540 as a special-purpose vehicle to issue bonds intended to provide a revenue stream to support the Government Employees’ Retirement System. Government House said the entity is separate from the Government of the Virgin Islands and carries its own bond rating.

According to the statement, the refinancing plan would allow rum cover-over bonds to be reissued at lower interest and debt-service costs to provide long-term financial support for GERS.

Government House also said the U.S. Treasury Department and the Interior Department agreed that matching-fund revenues paid by Interior from rum tax cover-over receipts would be deposited into a restricted account and paid to the special-purpose vehicle while its bonds remain outstanding.

In a pre-sale announcement cited by Government House, Kroll said the legal structure of the corporation and related agreements would help insulate pledged matching-fund receipts and the corporation from the Virgin Islands government's credit risk.

Official source: https://www.vi.gov/governors-refinance-plan-to-stabilize-gers-yields-quick-results-on-bond-market/