SAN JUAN, June 25 Puerto Rico's governor filed
legislation on Wednesday to authorize a bond issue of up to $60
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)