Bloomberg News
KBRA raised the outlook on its BBB rating on U.S. Virgin Islands rum tax bonds to stable from negative, citing the federal government’s permanent increase to the rum cover over rate earlier this month.
“The permanently increased rate, in KBRA’s view, should help alleviate credit pressure created by an ongoing, multi-year trend of declining pledged Matching Fund receipts,” the agency said.
The receipts in fiscal 2025 associated with a rate of $10.50 per proof gallon provided coverage of 1.83 times maximum annual debt service, the first time the receipts declined below 2.0 times.
“KBRA anticipates that the increased cover-over should stabilize MADS coverage to at or near 2.0 times over the near term,” KBRA said.
