(Reuters) - S&P Global Ratings warned on Tuesday that it will withdraw its credit rating for the U.S. Virgin Islands within the next 30 days if the territory’s government stops providing information to the rating agency.
The U.S. Virgin Island indicated that it would “stop directly providing information to us,” as of Aug. 25, said S&P credit analyst Oladunni Ososami.
“We have learned that the territory intends to no longer provide us with the information we consider necessary to evaluate its liquidity, including interim reports which show its monthly cash balances,” said Ososami.
U.S. Virgin Islands Governor Kenneth Mapp announced on a local talk show in August that his territory had “severed our ties” with rating agencies following a set of downgrades by S&P and Fitch.
Mapp said that “we don’t have market access, so it makes very little sense for the rating agencies to come telling you every other month you can’t borrow,” the Virgin Islands Consortium reported on Aug. 23.
“The market is very clear and concise in its message,” Mapp said. “Don’t speak to me about fiscal balance, show me that you can attain fiscal balance, so that’s what we will do.”
The U.S. Virgin Islands is located in the direct path of Hurricane Irma, a highly dangerous Category 5 storm expected to hit the territory overnight.
S&P downgraded the U.S. protectorate on Aug. 16 to CCC+ and CCC from B and B-. Fitch lowered its rating a day earlier to CCC from B, citing concerns about growing payables and liquidity pressures.
In response to the downgrades, the Virgin Islands government said it was “aggressively and proactively” cutting spending and increasing revenues through more stringent tax collections and new so-called “sin taxes” on liquor, cigarettes, and sugary drinks.
But the territory has struggled to shake fears within the investment community that it could eventually follow the path of Puerto Rico, a neighboring territory at the center of the biggest government bankruptcy in U.S. history.
“The rating agencies have just failed to look at the USVI separately from developments in Puerto Rico and that is not fair or accurate,” government spokesman Lonnie Soury said in a statement after the downgrades.
With just over 100,000 inhabitants, the U.S. Virgin Islands owes north of $2 billion to bondholders and creditors, the biggest per capita debt load of any U.S. territory or state. It amounts to more than $19,000 per resident.
Reporting by Robin Respaut in San Francisco; Editing by David Gregorio