After two years of staying away from such transactions, the Commonwealth is considering a sale of general obligation bonds sometime in 2011 to finance infrastructure projects, Government Development Bank President Carlos García said Tuesday.
While the government official did not say when the sale would take place or how much the agency is looking to raise, García told Bloomberg the administration’s plans also call for selling as much as $2.1 billion in other types of bonds next year.
About half of the proceeds will be used to refund current public debt, including $530 million in outstanding general obligations and $420 million related to building-authority securities, García told Bloomberg.
By definition, GO bonds are municipal papers backed by the issuer’s “taxing power” rather than the revenue it may have available for the project it is looking to finance. GO bonds do not require collateral.
S&P classifies Puerto Rico’s GO bonds as “BBB-,” one notch above junk, effectively keeping the island from selling bonds. The last time the government carried out a GO bond sale was in September 2008, when the Acevedo Vilá administration raised $250 million.
Business reporter with 25 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other areas of the economy.
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