Pago Pago, AMERICAN SAMOA — The American Samoa Economic Development Authority (ASEDA) is expecting early this week, a rating for its proposed 2018 bond sale of around $50 million, with proceeds to fund two major projects, after a rating presentation was made early this month during a meeting in Honolulu.

This is according to ASEDA board chairman, Uelinitone Tonumaipe’a, who is also the ASG Treasurer, during last Friday’s cabinet meeting. Tonumaipe’a gave a briefing on the ASEDA delegation meeting in Honolulu during the week of Nov. 4th where the “rating presentation” to Moody’s — the US based bond rating company, was presented.

Tonumaipe’a said that Gov. Lolo Matalasi Moliga requested that the ASEDA board give cabinet members a similar presentation to that made in Honolulu but that would take some two-hours.

Therefore, ASEDA presented to the cabinet meeting a summary — including a 10-minute video, that was also presented to Moody’s that summarizes the projects funded with the first ASEDA bond series issued in 2015.

The video opened with reigning Miss Pacific Islands, American Samoa’s Matauaina To’omalatai, making the introduction welcoming the Moody’s team on behalf of the governor, lieutenant governor, the people of American Samoa and the ASEDA delegation.

“I am pleased to share with you the accomplishments we have achieved with your investments in our initiatives” which were meant to among other things, strengthen local infrastructure and roads, provide financial stabilization, boost the economy, expand the inter island transport and improve health care service, said Matauaina.

The 2015 bond series funded several major ASG projects, such as the solar project in Manu’a, road improvement projects, shipyard, the new MV Manu’atele, Customs division scanners, and the Territorial Bank of American Samoa.

Representatives of ASG entities, which received proceeds from the bonds, spoke about how the bonds were used to improve their services for the public.

Also included towards the end of the video presentation were the two projects to be funded with the 2018 proposed bond — the construction phase of the new Fono building and the American Samoa TeleCommunications Authority’s Hawaiki cable expenditures.

Department of Public Works director, Faleosina Voigt, who is also the ASEDA board secretary, explained the Fono building project, which is being implemented in three phrases. Both the first phase — which is demolition of the old Fono building and the second phase, laying the foundation — are completed and were funded by the 2015 bond.

“Currently we’re on the third phase, and the design is completed and we look forward to the successful completion of this project,” said Voigt.

For ASTCA, it was acting chief executive officer, Falaovaoto Sualevai, who spoke on the video, saying, “American Samoa has faced a bottleneck with internet bandwidth, until July 2018, when Hawaiki came on board and has changed the way of life in American Samoa.”

She explained the improvements to both residential, business and government services since Hawaiki cable was launched.

“At the current state, we are still looking for funding to pay off the remaining amounts that we owe Hawaiki cable,” she explained “We appreciate the support of ASEDA to assist us in that area, some good investment for the community, and for the territory and it’s a way of life that we need to come up to.”

ASEDA board vice chair, Attorney General Talauega Eleasalo Ale told the cabinet meeting that the topic he was supposed to talk about was summarized in the video, which outlined the accomplishments that were made from the first bond-funding of close to $80 million. He cited a handful of accomplishments such as TBAS and the MV Manu’atele, saying that the first bond made it possible to achieve these initiatives, which are the visions of the governor and lieutenant governor for the people of American Samoa.

He said American Samoa “can’t just sit around and wait for money to drop from the sky. We have to go out and actively look and find the money. And then we have to come back and be honest with ourselves, to make sure that we are accountable for how we spend this money.”

“And the experience that we’ve had in the last three years, since 2015, shows that: number one — we have put the money to work for the people of American Samoa and number two we have been accountable, we have not missed one payment of our bond debt service.”

For the proposed 2018 bonds, he says it’s “anywhere between $45 million and $50 million” and explained that the “numbers still need to be finalized because there are some costs to be added.”

The two main projects to be funded with proceeds of the new proposed bonds are for Hawaiki and the Fono building. He explained that Hawaiki is the future of American Samoa — “another pillar” to add to economic development for the territory and “the Fono is our past, it’s our history” and future.

“The Fono cannot be meeting in various places like they are today. The Fono is an important branch of the government, it must be housed in an appropriate house,” he said.

The Fono building “is our White House,” said Talauega, adding that the United States has a nice White House and asked, “where is the White House for American Samoa?”

He went on to explain why the government decided on bonds to finance these two projects.

“We have looked, we have asked for funding here locally and federally, to fund these two important projects,” Talauega explained. “We looked for funding with the federal government. And what did they say? ‘No.’”

“So that’s why we’re going to the bond market and we ask everyone’s support, so that we could get these funds quickly and we can execute and see these projects come into reality,” he pointed out.

Tonumaipe’a told cabinet members that “we first need to get a rating”, which resulted in the Honolulu meeting early this month, and the “rating” is expected Tuesday this week.

Thereafter, work follows by underwriters with selling of the bonds, which have a closing date of Dec. 13.

Tonumaipe’a also addressed an issue that he says he has continued to hear about again and again that the ASEDA bonds are “junk bonds”. He repeated again what he had said in the past before lawmakers — that there is no such thing as junk bonds.

He explained that the list of companies who bought into the 2015 bonds series are not small companies but are well-known companies in the world and these companies buy bonds globally.

NOTICE OF BONDS TO BE ISSUED

In accordance with local law, ASEDA last week issued a public notice, saying that its board adopted on Nov. 7 a Resolution which authorized the issuance of general revenue bonds, series 2018, in an aggregate principal amount not to exceed $65 million to mature in not more than 25 years from their date or dates, to be sold at a price not less than 96% of the total principal amount thereof, and to bear interest at a maximum net effective rate or rates not to exceed 12% per annum.

As provided by law, any person interested in this transaction shall have the right to contest the legality of the Resolution within 20 days from the date of publication of the notices. (See Samoa News edition Nov. 21 for details in the paid public notice.)

BACKGROUND

Samoa News should point out that the term “junk bond” — is the derisive or mocking term used to identify bonds that are rated below investment grade (IG).

An IG bond’s credit rating is BBB- or higher by Standard & Poor’s or Baa3 or higher by Moody’s. The rating indicates that payment obligations are likely to be met.

A junk bond — also known as a high-yield bond — points to the amount of interest to pay on the issued debt by the debtor as it’s usually considerably higher than on a IG rated bond due to the risk involved.