Bondholders updated on local economy deemed “currently strong ... with expectations of continued prosperity”
Pago Pago, AMERICAN SAMOA — Based on advise from consultants, American Samoa Economic Development Authority (ASEDA) board of directors has opted not to move forward with the proposed general refunding bond 2020 series. In the meantime, the board has updated investors on the latest development at StarKist, which is moving to hire more workers.
As previously reported by Samoa News, the ASEDA board was working on refinancing its current bonds at a lower interest rate— taking advantage of the bond market at this time, with a bond rating presentation with Moody’s investment firm set for May 20th. (See Samoa News edition May 11th for details.)
Responding to Samoa News inquiries for updates, ASEDA board member, Iulogologo Joseph Pereira said yesterday that Moody’s rating presentation “was suspended as we decided, based on our consultants' advice, not to move forward with the refinancing proposal as the market had turned against and not in our favor. We will wait until we hear from our bond advisors and bond counsels.”
However, Iulogologo said ASEDA did fulfill its required Annual Investor Call to update the current bondholders on the status of the local economy and American Samoa's financial status.
“The major area of concern was the cannery,” said Iulogologo who is also, the governor’s executive assistant. “ASEDA assured the investors that our fishery industry is remaining stable with the completion of the first phase of the California production facility relocation [to the territory] and the first line was operational forging the hiring of more people here.”
“The second production line will be operationalized soon causing the creation of additional permanent jobs,” he said, adding that ASEDA also reported to investors that local StarKist's operation was not impacted by the COVID-19 pandemic because the Governor made sure that the cannery would remain open by exempting its operation from coronavirus restrictions.
Additionally, the governor also assured US President Donald Trump that StarKist would support the National Food Security Strategy by keeping all U.S. production facilities open and functioning.
“Thus, since the start of the Coronavirus pandemic StarKist has been operating at maximum capacity and it will continue to do so to address the need for food supplies,” he point out.
Investors were also informed that the second economic pillar for local economy, the government, is also maintaining its operating capacity to ensure that purchasing power continues to be available in the economy to prop up sales in the private sector.
“The injection of federal financial aid has also bolstered purchasing capacity available in the economy which went a long way to off-set reduction of activities in the hospitality/tourism industry,” he explained.
“Thus with the two economic pillars remaining stable, the economy is currently strong with expectations of continued prosperity upon full injection of federal financial aid into the economy,” he points out.
Moreover, ASG “has faithfully made all of its monthly payments since the issuance of the bonds thanks to the support from the Legislature of American Samoa,” he said.
Asked when the board will move forward with the proposed 2020 bond series, Iulogologo responded, “that decision will be triggered by the recommendation from our bond advisors and our bond counsels.”
“The bond refinancing proposal's basic aim was to reduce the interest rates on our bonds which will translate into lower bond payments and will not change the current repayment period,” he explained.
Rep. Larry Sanitoa had raised last month in the House, the need for details on the proposed 2020 refinance bond. While he can understand ASEDA trying to get a better interest rate “so that we can get a better annual payment plan, I was concerned that adding another 5 years to the repayment plan might actually cost us more in the long run,” Sanitoa told Samoa News yesterday.
“Currently, we are paying like $12 million a year with an 8% interest. Total bond plus interest is at $240 million,” he explained.