(Adelup) — Puerto Rico’s financial problems caused Fitch Ratings to downgrade the Government of Guam's outstanding Business Privilege Tax (BPT) bonds from A- to BB.
The rating had nothing to do with a change in Guam's credit strength or any factor within Guam's control. It was prompted entirely by the federal Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which President Obama signed into law on June 30, 2016. Following the passage of the new law, Fitch announced its intent to re-evaluate the BPT rating it designated for Guam.
Governor Calvo, the Guam Economic Development Authority, and the fiscal team met with Fitch on two separate occasions. They presented Guam's case to educate Fitch on PROMESA’s lack of applicability to Guam, and to assure Fitch that Guam has no intent or desire ever to lobby Congress for debt restructuring authority.
Fitch stated that despite Guam’s strong economy, growing revenues, and strong economic outlook, they are concerned with the Government’s inability to sustain a structural balance and high liability burden. Based on their unchanging position, the administration requested the ratings be withdrawn.