NEW YORK, April 30 Prices of Puerto Rico's newly issued general obligation bonds rose to their highest in three weeks on Wednesday, a day after the economically troubled U.S. commonwealth proposed $1.4 billion of spending cuts in the upcoming budget.
The bonds maturing in 2035 and carrying a coupon of 8 percent traded with an average price $92.165 and a yield of 8.822 percent. They are part of a $3.5 billion refinancing deal that Puerto Rico sold to institutional investors in March.
Average inter-dealer prices for the bonds last reached that level on April 9, according to Thomson Reuters data. More than $55 million of bonds traded, making Wednesday the most active day since April 15.
Puerto Rico's governor, Alejandro Garcia Padilla, announced the cuts in public spending late on Tuesday as the commonwealth government agencies braced for measures that will be taken to produce the first balanced budget in years.
"The 2015 budget proposal appears to be a positive development for the commonwealth, based on its effort to move toward structural balance, its call for spending restraint and the avoidance of new deficit financings," ratings agency Moody's said in a statement on Wednesday. (Reporting by Edward Krudy; Editing by Lisa Shumaker)