Prepa raises $650M through bond emission

Written by  //  April 12, 2012  //  Government  //  No comments

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Prepa will use the proceeds of its bond issue to restructure debt and cover next year's capital improvement projects. (Credit: © Mauricio Pascual)

The Puerto Rico Electric Power Authority concluded its two-day bond issue Wednesday, selling $650 million in bonds, about 36 percent more than the original $475 million the government was looking to raise. The transaction is expected to get the final approval from the Government Development Bank’s and Prepa’s boards today, GDB President Juan Carlos Batlle said.

Total orders exceeded $2 billion, which represents more than three times the amount of bonds available for sale, he said. The strong demand and interest for Prepa’s bonds allowed the government to adjust the interest rate on bonds maturing in 2042 by 0.12 percent — from 5.20 percent to 5.08 percent — resulting in a lower cost to for Prepa, Batlle said.

This issue will allow Prepa to restructure its debt to provide achieve savings and will also fully finance the agency’s capital improvement plan for fiscal 2013.

“The success of this issue reflects the significance of meeting face to face with investors to explain Prepa’s strategic plan and emphasize the fiscal transparency of the government agencies turning to the capital markets,” said Batlle.

“This support is also evidence that investors and accrediting agencies endorse the strategic plan outlined by Prepa, including: the diversification of our current dependence on oil to natural gas and other renewable energy sources, reducing operational costs, cracking down on energy theft, and implementing a new fuel purchasing model,” said Juan Manuel Román, executive vice president of the GDB.

The final distribution of the bonds had more than 40 institutional investors, said José Otero, the GDB’s executive vice president of financing.

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