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Rating Action:

Moody's assigns initial Ba3 to $73M of American Samoa General Revenue and Refunding Bonds

Global Credit Research - 22 Jul 2015

New York, July 22, 2015 --

Moody's Rating

Issue: General Revenue and Refunding Bonds, Series 2015A (Tax-Exempt) ; Rating: Ba3; Sale Amount: $40,455,000; Expected Sale Date: 08-10-2015; Rating Description: General Obligation

Issue: General Revenue and Refunding Bonds, Series 2015B (Federally Taxable); Rating: Ba3; Sale Amount: $32,490,000; Expected Sale Date: 08-10-2015; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned an initial Ba3 rating to the Territory of American Samoa's $40.5 million General Revenue and Refunding Bonds Series 2015A (Tax-Exempt) and $32.5 million General Revenue and Refunding Bonds Series 2015B (Federally Taxable), to be issued through the American Samoa Economic Development Authority.

SUMMARY RATING RATIONALE

The rating reflects American Samoa's status as a US territory which receives generous operating and capital assistance from the federal government, as well as its low long-term liabilities. The rating also factors in the territory's small and volatile economy, low income levels, weak financial position, and financial management challenges. Additionally, there are risks associated with changes in American Samoa's banking system, including the loss of the territory's only US-based retail bank and its planned replacement with a government owned charter bank.

OUTLOOK

Outlooks are usually not assigned to state and local government credits with this amount of debt outstanding.

WHAT COULD MAKE THE RATING GO UP

- Diversification and growth of economy

- Sustained improvement in financial management and financial position

WHAT COULD MAKE THE RATING GO DOWN

- Further weakening of financial position

- Economic deterioration

- Loss of US federal support

OBLIGOR PROFILE

American Samoa is a chain of seven small islands in the Pacific about 2,700 miles southwest of Hawaii and 2,300 miles northeast of New Zealand, that became a US territory in 1900. While that region is generally not prone to hurricanes, the territory did experience a major tsunami in 2009.

LEGAL SECURITY

The bonds will be special limited obligations of American Samoa, secured by a pledge of specific revenues. As defined by the bond indenture, the revenues comprise of personal income taxes, corporate income taxes, and certain excise taxes that include a tax on imported beer, malt extract, alcoholic beverages, motor vehicles, and others. The pledge of tax revenues is subject to the prior deduction of certain legislative earmark deductions. These pledged taxes are collected by the territory and transferred to the trustee on the 15th of each month on a one-sixth, one-twelfth basis. Fiscal 2014 pledged revenues provide 15.1 times coverage of peak debt service, and the territory has a standard debt service reserve fund. If the territory chooses to issue additional bonds, historical pledged revenue must be at least 4.0 times average annual debt service. While these pledged taxes are the main source of revenue, the bonds are also backed by the full faith and credit of the territory.

USE OF PROCEEDS

Proceeds will be used to take out outstanding loans to the pension system, and to help capitalize a proposed a charter bank to be owned and operated by the government.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was US States Rating Methodology published in April 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The following information supplements Disclosure 10 ("Information Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC Rule 17g-7") in the regulatory disclosures made at the ratings tab on the issuer/entity page on www.moodys.com for each credit rating:

Moody's was not paid for services other than determining a credit rating in the most recently ended fiscal year by the person that paid Moody's to determine this credit rating.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Kenneth Kurtz
Senior Vice President
Public Finance Group
Moody's Investors Service, Inc.
One Front Street
Suite 1900
San Francisco, CA 94111
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Nicholas Samuels
VP - Senior Credit Officer
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns initial Ba3 to $73M of American Samoa General Revenue and Refunding Bonds
No Related Data.
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