Pago Pago, AMERICAN SAMOA — Moody's Investors Service has assigned a “Ba3 rating” to the American Samoa Government’s planned 2018 bond series, according to a company rating news release yesterday, which also noted that adding this proposed new bond to the previous bond series gives a “negative outlook” for the territory.

The proposed bond sales is issued under the authority of the American Samoa Economic Development Authority, whose chairman ASG Treasurer Uelinitone Toumaipe’a, announced at last Friday’s cabinet meeting that the ASEDA delegation made a “rating presentation” early this month to Moody’s during a meeting in Honolulu.

The Moody’s rating was expected to be out early this week with the bond closing date of Dec. 18.

Tonumaipe’a and ASEDA vice chairman, Attorney General Talauega Eleasalo Ale didn’t immediately respond to a Samoa News request yesterday morning for comments to Moody’s rating and negative outlook for the territory.

Yesterday morning, Moody’s announced its rating action. It has “assigned a Ba3 rating to …American Samoa's planned offering of $50 million General Revenue Bonds, Series 2018.”

“Concurrently, we have affirmed the Ba3 assigned to its outstanding general revenue bonds,” said Moody’s, referring to the previous issued bonds (2015 and 2016 of about $78 million). “Following the issuance of the Series 2018, the territory will have $123.8 million general revenue bonds outstanding. The outlook is negative.”

Moody’s explained that the Ba3 ratings reflect American Samoa's status as a US territory which receives substantial operating and capital assistance from the federal government.

“The rating also factors in the territory's small and volatile economy; low income levels; significant long-term liabilities; improving, but weak financial position; and financial management challenges,” according to the US-based rating company.

“Additionally, the rating incorporates risks associated with operating a government-owned charter bank,” Moody’s continued.

Proceeds of the 2018 bonds sale will be used to fund the construction of a new Fono building “and to fund the cost of a connection to, and capacity on, the Hawaiki broadband cable which will provide the territory with high speed connection to the internet,” the company said.

It also gave a brief “rating outlook”, saying the “negative outlook reflects the fiscal challenges facing American Samoa as a result of stagnant revenues and the need to improve the funding of its retirement system and service an increased debt burden.”

Moody’s provides factors that could lead to an upgrade — or downgrade — of the bonds rating. Factors that could lead to an update, according to Moody’s, are: diversification and growth of economy and substantial improvement in financial management and financial position.

On the other hand, factors that could lead to a downgrade are: weakening of financial position; economic deterioration; reduction of US federal support; and failure to improve funding of the territory's retirement system.