Fitch Ratings confident in Calvo’s tax refunds bond language, assigns A- Stable Outlook
The government of Guam received its highest investment rating in its history, an A- Stable Outlook from Fitch Ratings agency.
This is the first rating agency to publicly release a rating on the tax refund bonds. A rating from Standard & Poor’s is expected soon.
“The bonds are expected to sell via negotiation on November 15, 2011,” according to the release from Fitch Ratings.
“This is really good news,” Governor Eddie Baza Calvo said. “We’ve worked hard to make good on our promise to pay the tax refunds by Christmas. This is going to be a great Christmas for many people. For our island, this is an affirmation that our fiscal policies and the changes we’re making are taking the island up a better path, in a new direction.”
Fitch Ratings is especially confident in the language of the bond law that protect bondholders. It does this by pledging the revenues from the Business Privilege Tax as security on the bond.
“This is exactly why we fought hard to use the BPT to securitize the bond,” Governor Calvo said. “I really want to thank Senators Tony Ada, Frank Blas, Jr., Chris Duenas, Judi Guthertz, Sam Mabini, Tina Muna Barnes, Adolpho Palacios, Dennis Rodriguez, Jr., Mana Silva Taijeron and Aline Yamashita for supporting what we proposed to do. They made the right decision, obviously. We just wish the legislative leadership would have authorized a bond that would take care of all tax refunds.”
Fitch Ratings notes GovGuam’s history of operating deficits, and “a large end-of-year fund deficit.”
“The current administration is taking steps to achieve structural balance in the budget including a hiring freeze, reductions in the use of electricity and vehicles, a rescinding of across-the-board pay increases, 3% budget retention for all agencies and other cost reductions,” the report from Fitch Ratings states.
“This rating was a wonderful exercise in interagency cooperation and I’d like to thank the Governor along with hard working people at the Gov’s office, DOA, BBMR, DRT and most especially my very capable staff at GEDA for making this possible,” GEDA Administrator Karl Pangelinan said. “We’re almost there and the people of Guam waiting for what’s rightfully theirs won’t have to wait much longer.”
Please call Troy Torres at 475-9304 or 486-8887 for more information.

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