Another U.S. territory is sliding into junk-bond status: The Virgin Islands Water and Power Authority, the Caribbean archipelago’s utility, had the credit rating on its most secure debt cut below investment grade by S&P Global Ratings, Bloomberg reported yesterday. The rating company cited its low levels of cash and a backlog of unpaid bills, some owed by the government. The Virgin Islands, with about 100,000 residents, is contending with some of the same forces that pushed Puerto Rico into a cascading series of defaults: a declining population, retirement-fund debts and a history of borrowing to cover budget shortfalls. Its $2.4 billion of debt, issued by various arms of the government, amounts to some $23,000 per person, even more than Puerto Rico’s $20,000. The pressure on the utility is also similar: The Puerto Rico Electric Power Authority, squeezed in part by unpaid bills from government agencies, struck a deal with creditors to restructure its debt.
