SAN JUAN, June 25 Puerto Rico's governor filed legislation on Wednesday to authorize a bond issue of up to $60 million.
According to Senate Bill 1165, the bonds would be used to cover the cost of necessary public works projects and of the costs of issuing the bonds. The projects should have a useful life of at least five years.
The timing of the sale depends on market conditions, and the legislation specifically forbids using proceeds to cover operational costs. The legislature, which has to approve the bill, ends its current session in five days.
The legislation authorizes the Government Development Bank - the territory's bank, financial adviser and fiscal agent - to provide loans for financing projects that would be repaid with the bond proceeds.
It would also allow Puerto Rico's Treasury Department to make temporary payments from the general fund for the public improvements through the issuance of Bond Anticipation Notes.
Governor Alejandro Garcia Padilla on Wednesday also unveiled a plan for public corporations managing the territory's infrastructure to restructure their debts. The bill is expected to pass the legislature quickly.
His administration and the Government Development Bank both said the authorities would continue providing services and completing renovations during any restructuring.
The island last came to market in March with $3.5 billion in bonds, the largest junk sale ever in the U.S. municipal bond market. Those bonds offered 8 percent coupons and have fetched yields topping 9 percent in secondary trading. (Reporting by Reuters in San Juan; Writing by Lisa Lambert in Washington; Editing by Jonathan Oatis)