Rating Action: Moody & # 39; s Assigns Baam Guam & # 39; s Hotel Occupancy Tax Revenue Refunding Bonds, Series 2021A, Ba1; Outlook Negative Global Credit Research – February 25, 2021 New York, February 25, 2021 – Moody & # 39; s Investors Service has awarded the Guam government a Ba1 rating of US $ 61 million for Hotel Occupancy Tax Refunds, Series 2021A, assigned. The outlook is negative. The Ba1 rating for Guam's hotel occupancy tax bonds affects the area's small and highly tourism-dependent economy. strong debt service coverage through tight pledging of hotel occupancy taxes; and a solid governance structure backed by management quality and experience, as well as solid legal regulations, including an additional 1.8x bond test, a cash-backed debt service reserve, and a 1.25x interest rate. The rating is consistent with Guam's general obligation rating and reflects the overlapping credit attributes of the hotel occupancy tax bonds with the general economic profile and earnings performance of Guam. EVALUATION RESULT The hotel occupancy tax bonds have a negative outlook on the Guam government, which threatens the recovery of the major tourism sector in Guam to come later and more slowly than currently expected and put pressure on the government's finances and liquidity. FACTORS THAT COULD RESULT IN A RATING UPGRADE – An upgrade in Guam's GO Rating FACTORS THAT COULD RESULT IN A DOWNGRADE IN THE RATING – A downgrade in Guam's GO rating – Substantial decrease in pledged income resulting in significantly lower coverage Debt servicing leads. LEGAL SECURITY The tax bonds for hotel occupancy are secured by an excise tax levied on the temporary occupancy of hotel rooms, accommodations and bed & breakfasts. or similar facilities. Currently, the government imposes an 11% excise tax on hotel rooms and a 4% tax on bed and breakfast units. The Bond Act, which approved the 2021A Series Bonds, established a statutory lien on hotel occupancy tax receipts for payment of the bonds. PROCEDURE The 2021A Series Bond proceeds will be used to repay all outstanding Guam Hotel Occupancy Tax Bonds for estimated present value savings of $ 18 million, which will be used for savings of approximately $ 3 million annually from 2022 to 2026. The final term will not be extended. PROFILE The Guam Territory is located in the western Pacific, approximately 3,800 miles west-southwest of Honolulu, 1,550 miles southeast of Tokyo, and 1,600 miles east of Manila. The land area is 212 square miles, roughly the size of the District of Columbia, and the population is approximately 162,900. The gross domestic product was $ 6.3 billion in 2019, and GDP per capita was $ 38,742, which is roughly 59% of the US level. METHODOLOGY The main method for this rating was the US Public Finance Special Tax Methodology published in January 2021 and available at https: // www .moodys.com / researchdocumentcontentpage.aspx? docid = PBM_1260087. Alternatively, a copy of this method can be found on the Evaluation Methods page at www.moodys.com. REGULATORY DISCLOSURES For more information on Moody & # 39; s key rating assumptions and sensitivity analyzes, please refer to the Methodical Assumptions and Sensitivity to Assumptions sections of the disclosure form. 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