As Puerto Rico moves closer to debt restructure, the Virgin Islands may need a similar lifeline
ST THOMAS, USVI -- As Puerto Rico moves closer to restructuring its $70 billion debt after the US federal board overseeing its finances issued a framework to pull the island out of crisis and resumed talks with creditors, another US Caribbean territory, the US Virgin Islands, is grappling with some of the same forces that pushed its regional neighbour into a cascading series of defaults.
With interest rates edging higher, the USVI – which has more debt per person than Puerto Rico – is finding it more difficult to borrow, Bloomberg reported.
The territory shelved a $219 million bond issue last week amid a spike in yields triggered by the post-election selloff in credit markets. That prompted S&P Global Ratings to place its debt on a negative watch for up to 90 days, warning that the government may find it difficult to meet its debt obligations if it struggles to access credit markets.
According to Bloomberg, the two Caribbean territories are facing similar fiscal issues: shrinking populations, cash-strapped pensions, histories of borrowing to paper over budget shortfalls and unemployment rates that are twice as high as in the US mainland.
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