Matching Fund Special Purpose Securitization Corporation Surveillance Report

Rating Summary

The long-term rating reflects a legal framework that features a true-sale of gross pledged, rum-related, excise taxes (“Matching Fund Receipts”) to a bankruptcy remote entity that KBRA believes insulates the revenue stream from credit risk of the Government of the U.S. Virgin Islands (the “Government”); a set-aside of pledged revenues prior to the outset of each fiscal year; and a conservative additional bonds test at 3.0x of maximum annual debt service (MADS). Offsetting these factors are the limited nature of pledged Matching Fund Receipts, reliance on two rum producers, and the potential for fluctuating consumer preferences to adversely affect rum sales.

Matching Fund Securitization Bonds (the “Bonds”) are secured by a statutory lien on pledged Matching Fund Receipts, which were sold through a true sale by the Government to the Matching Fund Special Purpose Securitization Corporation (the “Corporation”), a bankruptcy remote special purpose entity. The sale was…