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UPDATE 1-Puerto Rico's revenues jump 26 pct in December
January 9, 2014 / 6:40 PM / in 4 years

UPDATE 1-Puerto Rico's revenues jump 26 pct in December

Jan 9 (Reuters) - Puerto Rico is getting a fiscal boost from new taxes, as it posted a 26 percent rise in monthly revenue to $913 million, a record high for the month of December, the island’s treasury secretary said Thursday.

Revenue last month jumped $190 million from December 2012 and topped initial estimates by $1.3 million, Treasury Secretary Melba Acosta Febo said in a statement.

Prices of some Puerto Rico bonds, which began slumping in September, perked up on Thursday in generally mixed trading in America’s $3.7 trillion municipal bond market.

Puerto Rico, a financially pressed U.S. commonwealth with chronic budget deficits, also reported an overall revenue rise to $525 million since June, up 15 percent over the same six months a year earlier.

Corporate income tax in December totaled $316 million, or more than double year-earlier collections before the government increased various taxes, Acosta Febo said.

Revenue totaled $107.7 million in December from a sales and use tax - the highest amount since the tax was put in place in 2006. That marked an increase of $7.9 million, or 7.9 percent, compared to a year earlier.

With $70 billion of outstanding tax-free debt, Puerto Rico is weighing a new bond offering in coming weeks even as U.S. credit agencies consider cutting the island’s debt rating to junk, according to finance officials. It already worries municipal bond buyers, who demand it pay the highest interest rates of any big municipal debt issuer.

In secondary trading on Thursday, the price of a 2040 revenue bond with a 5 percent coupon from Puerto Rico’s sales tax authority rose to 76 cents on the dollar from about 73 cents on Wednesday. The yield on Thursday was 7 percent.

A Puerto Rico public improvement general obligation issue with a 2024 maturity and a 5 percent coupon traded up on Thursday at 67 cents on the dollar, compared with 63.5 cents in late December.

Another 2024 issue with a 3.65 percent coupon from the island’s power authority rose on Thursday to nearly 81 cents on the dollar from 78 cents on Wednesday. It yielded 6.1 percent.

Looking to January, Acosta Febo said collections would get extra lift from corporate taxes that had been due in December, but were delayed by a court dispute decided in the government’s favor late in the year.

“Given the favorable decision upholding the constitutionality of the tax, we expect to receive additional payments during the current month of January 2014,” she said.

However, Acosta Febo gave no indication as to the size of the delayed collections.

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