The Puerto Rico Highway and Transportation Authority closed Thursday $400 million in Bond Anticipation Notes financing with RBC Capital Markets that will benefit both the agency and the Government Development Bank, its Interim President José Pagán said.
The notes will be used to repay previous financing by the GDB and the PRHTA and to cover expenses related to the issuance. The transactions completed in July and August will provide liquidity to the GDB and the Commonwealth, he said.
“The placement of these BANs will provide additional funds to strengthen GDB’s liquidity position,” Pagán said. “The successful placement of these securities demonstrates the confidence the financial community has in the Commonwealth of Puerto Rico, the PRHTA and the GDB.”
The final maturity date of BANs will be Sept. 1, 2015, and amortization will begin on Dec. 1, 2014. However, the PRHTA expects to refinance said BANs within the coming months through long-term bonds.
The repayment source of these BANs are the new additional recurring revenues for the PRHTA established by Law 30 and Law 31 of 2013, which guarantee that the PRHTA will receive approximately $270 million in additional revenues.
“It is important to acknowledge the work of the governor and the Legislative Assembly, who took the necessary steps to fully address PRHTA’s financial crisis, which had the potential to negatively impact GDB and Commonwealth finances,” Pagán said.
On a separate note, Pagán also commented that in addition to the $400 million in PRHTA BANs that closed Thursday, the Treasury Department, together with the GDB, also successfully issued BANs for approximately $400 million, which were placed in a private transaction with Barclays Capital.
Proceeds from the BANs placed with Barclays will be used to repay previous financing granted by the GDB and to refinance Commonwealth debt.
“The BANs placed with Barclays and RBC Capital Markets total approximately $800 million and provide the GDB additional liquidity to meet its responsibility of providing financial support to the government and facilitating economic activity on the island,” Pagán said.
For Fiscal 2014, the GDB has closed $900 million in Tax and Revenue Anticipations Notes (TRANs) for the Treasury Department. State-based and local private banks have provided two-thirds of those TRANs. The $900 million in TRANs also include $300 million provided by the GDB. TRANs are notes issued in anticipation of tax receipts and revenues.
“The Treasury Department will use the proceeds of these TRANs to meet budget obligations and thus cover the timing difference in the collection of tax revenues. These transactions evidence the banking community’s confidence in the GDB’s and the Commonwealth’s credit, and prove that the government of Puerto Rico is fulfilling its financial obligations within a framework of fiscal and financial discipline,” Pagán pointed out.
He also added that the GDB expects to close additional TRANs with private banks in September.