STANDARD & POOR’S UPGRADES GUAM POWER AUTHORITY

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STANDARD & POOR’S UPGRADES GUAM POWER AUTHORITY Rating climbed from BB plus to BBB minus

By Mar-Vic Cagurangan

HAGATNA, Guam (Marianas Variety, Dec. 23, 2008) – The bond-rating agency Standard & Poor’s has upgraded the Guam Power Authority’s rating for its existing revenue bonds from BB plus to BBB minus with a "stable outlook," bringing the agency closer to investment grade after six years.

"This announcement by S&P is the result of a sustained effort across many fronts to regain confidence from this rating company," GPA general manager Joaquin Flores said. "I am confident other rating companies will also share S&P’s opinion."

In raising GPA’s rating, S&P cited a number of factors that "reflected a sustained trend of operational and financial performance."

Among the factors that contributed to GPA’s fiscal health was the payout of the US$13.8 million streetlight debt that the government of Guam owed the agency from previous years, GPA spokesman Art Perez told Variety.

Besides the agency’s improved fiscal position and operational stability, Perez added, S&P also noted the bullish economic condition of Guam in general.

Other factors cited by the rating agency included the "more efficient use and greater availability of (GPA’s) base load generators, and the continued support from the Public Utilities Commission."

Through PUC’s support, the report said, GPA managed to recover fuel costs and allowed the agency to generate 98 percent of its energy needs from its own base load units.

"GPA has been able to save ratepayers nearly US$125 million in fuel costs since the Consolidated Commission on Utilities took over as the policy making body for the authority," Flores said. "That is a significant achievement."

Perez noted that the upgrade of the GPA rating came at a time when the agency is gearing up for the opening of a bidding next year to solicit private partners for alternative or renewable energy projects.

He said the rating jump -- from junk grade and now just one notch toward investment grade -- would make it easier for GPA to get a better deal, negotiate lower interest rates and make potential savings if it decides to go to the bond market.

 

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