June 14, 2018
Hagåtña — Investment grade ratings allows the Port Authority of Guam to improve and expand the Port — at a more affordable interest rate.
“The trend for our economy continues in an upward direction; to prepare for this we are laying the foundation — the buildup is at our doorstep and the PAG is just one area that requires modernization in order to support this growth,” Governor Calvo stated.
“The improvements at the Port will increase their ability to store and process greater volumes of goods that is expected with the continued growth of our island and its population,” Lt. Governor Ray Tenorio stated.
Across the island you can see either new businesses pop up and existing businesses expand. Additionally, our tourism numbers are still among the highest its ever been and we anticipate more growth with airlines like Jeju that are bringing more Japanese tourists. And that’s on top of the military expansion. All of this requires more goods to build the construction of facilities, homes and businesses, and support the growth in population.
Unprecedented Ratings
S&P Global Ratings assigned its ‘A’ long-term rating to the Port’s proposed $72.6 million series 2018 port revenue bonds.
A ‘Baa2’ rating from Moody’s Investors Service shows concerns but does acknowledge the the economic and financial improvements over the years as well as the island’s positive economic projection. “The assigned Baa2 rating is supported by the strong competitive position as Guam’s sole commercial port handling around 90% of the territory’s imported cargo including a significant portion of military cargo,” the agency states.
Moody’s does warn that a downgrade is possible if there’s an “erosion of the government’s financial position and liquidity or deteriorating local economic conditions …” The agency previously stated concerns regarding the revenue shortfalls of the local government caused by the new federal policy – Tax Cuts and Jobs Act.
Port Operations must Expand with Guam
Proceeds from the Port’s bonds will finance the Port Authority’s capital improvement program – the first since it was built in the 1969.
The Port’s facilities and equipment upgrades will enable PAG to create operational efficiencies and maximize Port capacity. Modernizing efforts allows for the continued economic growth fueled by the expansion of U.S. military bases on the island as well as the private sector growth.
Improvements include:
• Transportation Investment Generating Economic Recovery grant program funding for rehabilitation of “H” Wharf and access road
• Replacement of the administration building to expand storage capacity
• Replacement and relocation of waterlines
