Guam’s quest to secure over $200 million in a bond offering hit a major stumbling block yesterday. Standard & Poor’s dropped Guam’s bond rating to “B,” two grades below junk bond status. S&P cited the stagnant economy, the unfunded liabilities of the GovGuam Retirement Fund, and the susceptibility of an economy based solely on tourism as reasons for dropping the rating even lower.
Suffice to say this will make in near impossible to float the much-hyped bond measure that the Camacho administration is touting as the answer to all of Guam’s worries. At the very least, an additional $20 million in premium insurance will have to be taken out against the chance of Guam defaulting on the bonds. Looking at Guam’s economy, I’d say chances of not meeting our debts are high.