Puerto Rico gov’t plans 3 trips to bond market before year’s end

Written by  //  July 19, 2013  //  Government  //  No comments

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The GDB is will return to the bond market in mid-August.  (Credit: © Mauricio Pascual)

The GDB is will return to the bond market in mid-August. (Credit: © Mauricio Pascual)

The Puerto Puerto government is planning at least three trips to the market before year’s end, looking to complete a number of bond issues to pay off debt and other public projects, members of Gov. Alejandro García-Padilla’s economic team confirmed Thursday.

During a conference call with investors and analysts, Government Development Bank Interim President José Pagán said the agency is “currently working on several transactions,” including a “significant bond issue” on behalf of the Highway and Transportation Authority to pay off a large portion of its debt with the GDB.

In May, GDB officials said they would seek to issue at least $200 million in HTA bonds, to pay down its obligation. However, on Thursday, Pagán was not specific about how much would be sought, or when. The HTA has not gone to market since 2008.

However, Pagán did confirm that the government would go to market with the Puerto Rico Electric Power Authority sometime in mid-August seeking to complete a $600 million bond issue.

“We met with investment banks to outline a strategy to go to market with the agency with the best credit, which is PREPA, to which credit ratings agencies have grated a stable outlook,” he said. “PREPA is followed by the Sales Tax Financing Corp. (COFINA).”

The government’s plans to reactivate itself in the bond market have been held back by a lack of full 2012 audited statements, Treasury Secretary Melba Acosta had said would be ready by July 31.

However, that date has been pushed back to mid- or late August, which is when the Ports Authority and the University of Puerto Rico should have their reports ready, she said.

With the audited statements in hand, the GDB will then propose a $600 million general obligation (GO) bond issue.

“Puerto Rico and the economic team are committed to continuously improve Puerto Rico’s credibility and we look forward to coming to market in the future with the PREPA and GO deals,” he said.

In the meantime, the government is turning to private banking for financing, Pagán said.

“We have access to several banks that have been giving us bond anticipation notes, so we have the necessary cash flow and should have no significant difficulties,” prior to the planned bond issues, said Pagán, who was confirmed to his position by the GDB board Wednesday, following Javier Ferrer’s resignation to the job, effective today.

Credit ratings agencies receptive
Ferrer’s departure is not expected to disrupt the government’s economic team moving forward, as Pagán said the strategies laid out in the last six months will continue on.

“We’ve gotten very good feedback from ratings agencies, which have given Puerto Rico credit for the work and measures that have been implemented,” he said. “We’re confident we’ve made a difference with measures we’ve taken and that will be reflected in some way. We’ve asked them for an upgrade.”

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