PREPA sells $500M in Build America bonds
In a last-ditch effort to raise cash this year, the Puerto Rico Electric Power Authority announced it will be selling $500 million in taxable Build America Bonds before the program’s Dec. 31 deadline to save $130.8 million over tax-exempt borrowing, company officials said Thursday.
The rush move responds to the agency’s interest in saving 35 percent in interest costs, Bloomberg reported.
“Today’s issue, backed by electricity charges, may yield 6.25 percent for 30-year bonds, he said. That’s a premium of about 180 basis points, or 1.80 percentage points, above comparable U.S. Treasuries. With the subsidy, the overall interest cost to the authority may be less than 5 percent,” said Bloomberg, quoting PREPA’s Finance Director Martin Arroyo.
The agency said it will use the proceeds of the bond sale to finance the controversial Vía Verde natural gas pipeline project, which the Fortuño administration said will be completed by February 2012. The Vía Verde pipeline — designed to carry natural gas to several power plants across the island — is already meeting with staunch opposition from local mayors and grassroots organizations for what they claim are its potentially harmful effects to the environment and humans.
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