Puerto Rico October revenues top forecasts by $110 million
(Reuters) - Puerto Rico's financially pressed central government reported on Monday that revenue collections in October were boosted by new taxes and totaled $856 million, a $262 million increase from a year earlier and $110 million over budget.
The government data gave a lift to Puerto Rico's debt, helping boost prices for the Caribbean island's widely held tax-free bonds in secondary trading.
In the first four months of Puerto Rico's 2014 fiscal year, revenues are up by $350 million from a year earlier and ran $120 million over forecasts, according to preliminary data issued by Secretary of the Treasury Melba Acosta Febo.
Corporate income tax revenue in October totaled $239 million, representing an increase of $157 million over October of last year. Withholding from non-resident corporations also registered a significant year-over-year increase of $153 million, Acosta Febo said.
Puerto Rico is a major issuer of debt in the U.S. municipal debt market and whose exceptionally high yields reflect wide worries that the island may default on some of its bonds. Wall Street credit agencies rate Puerto Rico's general obligation debt just above non-investment grade.
Puerto Rico bond prices traded up on Monday, even as the overall $3.7 trillion muni market changed little.
The yield on a 2032 Puerto Rico general obligation refunding issue with a tax-exempt 5.25 percent coupon fell to yield 8.10 percent on Monday from 8.45 percent on Friday.
A 2025 public improvement refunding bond with a 5.375 percent coupon yielded 6.07 percent on Monday after trading at 6.4 percent on Thursday, according to Municipal Market Data.
Investors demand that Puerto Rico pay the highest rates of any major muni issuer, with the yield spread on its 10-year GO debt now 640 basis points above a top-rated 10-year bond. In early June, the spread was 300 basis points higher, according to MMD.