Guam, the U.S. territory 4,000 miles (6,400 kilometers) west of Hawaii, had its rating raised to BB-from B+, still three steps below investment grade, by Standard & Poor’s on signs of a strengthening financial position.
“The rating action reflects our view of the government’s improved financial management practices, including improved transparency, stricter fiscal discipline and enhanced cash flow monitoring procedures and capabilities,” Paul Dyson, a San Francisco-based analyst, said today in a report.
While the BB- rating remains junk, the increase is the opposite of the New York-based company’s latest action on Puerto Rico, another U.S. territory. S&P in March lowered the commonwealth to BBB-, one step above junk, citing a budget shortfall.
The outlook on Guam’s general-obligation debt is stable, based on a view that “tourism and the economy are likely to improve during the next two years, benefiting Guam and providing it with opportunities to improve its financial position,” Dyson said in the report.