Ratings Agencies Predict WAPA Default But WAPA Says Unlikely

Both the Moody’s and the Fitch bond ratings agencies are concerned the Water and Power Authority might default on $49 million in bonds on July 1st, according to a report by Robert Slavin in the trade magazine The Bond Buyer, but WAPA spokesman Jean Greaux said Friday “we do not expect a default.”

Slavin quotes Moody’s Vice President Kathrin Heitman saying “Our Caa2 senior electric system revenue bonds rating, and Caa3 subordinated electric system revenue bonds rating with a negative outlook continue to reflect a high probability of default for the U.S. Virgin Islands Water and Power Authority. … We expect WAPA will likely be able to make debt service payments on the rated senior and subordinate electric system revenue bonds on July 1.”

Reached for comment Friday, WAPA spokesman Jean Greaux said Moody’s decision to put the utility on a negative watch was “highly anticipated” but emphasized the ratings agencies did not actually change the bond rating.

According to Greaux, the utility is in negotiations with an investor to purchase the bonds in question, which are its 2018 B bond anticipation notes.

“There is an ongoing negotiation,” he said. “The end game is we do not expect a default,” he reiterated.