Puerto Rico forecast assumes $1.3 bln financing by year-end
Oct 20 (Reuters) - Puerto Rico's Government Development Bank (GDB), the financing arm of the troubled U.S. commonwealth, will require around $1.3 billion in market financing by the end of December to meet its liquidity forecasts, according to a recent update from the GDB.
The refinancing, aimed at shoring up the GDB's liquidity position, would include $1 billion of a loan made to the Puerto Rico Highway and Transportation Authority (PRHTA) by the GDB and the remaining balance of $292 million of $400 million in PRHTA's short-term bond anticipation notes.
"We will continue to take affirmative measures to strengthen GDB's liquidity in order for it to perform its statutory mission," said the GDB's interim president Jose Pagan Beauchamp in a statement dated Oct. 19.
The GDB is forecasting liquidity of $1.8 billion by the end of the calendar year when the financing operations are completed. The commonwealth still has market access and was able to sell $900 million in short-term notes earlier this month. However, any sign Puerto Rico may have trouble tapping markets would be a concern to investors.
The refinancing would use proceeds from a long-term bond issued through the Puerto Rico Infrastructure Financing Authority PRIFA, the document said.
Reuters reported on Friday that the GDB, via PRIFA, may try to refinance the entire outstanding loan to PRHTA, which stands at around $2 billion, bringing total financing operations to around $2.5 billion by the end of the year.
PRIFA is considered to have better market access than PRHTA because it is not subject to the Recovery Act, a law passed earlier this year that allows some of Puerto Rico's public coporations to restructure their debt.
Puerto Rico has over $70 billion in debt and is struggling to produce its first balanced budget in years. The GDB's liquidity position is important in assessing whether the U.S. commonwealth can meet its obligations.
The GDB has current liquidity of $1.9 billion, including cash, bank deposits and unencumbered marketable U.S. government securities, it said in the liquidity and cash flow update. The report is part of an initiative to enhance public disclosure and reflects the bank's position as of October 17.
The GDB's liquidity balance is down from $3.1 billion in the first quarter of the fiscal year ending Sept. 30
Investors have complained about what they see as a lack of transparency in Puerto Rico's finances. The new policy of posting regular liquidity updates appears to be an attempt to redress that. (Reporting by Edward Krudy; editing by Andrew Hay, Chizu Nomiyama and Bernard Orr)
By Edward Krudy
UPDATE 3-Puerto Rico forecast assumes $1.3 bln financing by year-end
The refinancing, aimed at shoring up the GDB's liquidity position, would include $1 billion of a loan made to the Puerto Rico Highway and Transportation Authority (PRHTA) by the GDB and the remaining balance of $292 million of $400 million in PRHTA's short-term bond anticipation notes.
"We will continue to take affirmative measures to strengthen GDB's liquidity in order for it to perform its statutory mission," said the GDB's interim president Jose Pagan Beauchamp in a statement dated Oct. 19.
The GDB is forecasting liquidity of $1.8 billion by the end of the calendar year when the financing operations are completed. The commonwealth still has market access and was able to sell $900 million in short-term notes earlier this month. However, any sign Puerto Rico may have trouble tapping markets would be a concern to investors.
The refinancing would use proceeds from a long-term bond issued through the Puerto Rico Infrastructure Financing Authority PRIFA, the document said.
Reuters reported on Friday that the GDB, via PRIFA, may try to refinance the entire outstanding loan to PRHTA, which stands at around $2 billion, bringing total financing operations to around $2.5 billion by the end of the year.
PRIFA is considered to have better market access than PRHTA because it is not subject to the Recovery Act, a law passed earlier this year that allows some of Puerto Rico's public coporations to restructure their debt.
Puerto Rico has over $70 billion in debt and is struggling to produce its first balanced budget in years. The GDB's liquidity position is important in assessing whether the U.S. commonwealth can meet its obligations.
The GDB has current liquidity of $1.9 billion, including cash, bank deposits and unencumbered marketable U.S. government securities, it said in the liquidity and cash flow update. The report is part of an initiative to enhance public disclosure and reflects the bank's position as of October 17.
The GDB's liquidity balance is down from $3.1 billion in the first quarter of the fiscal year ending Sept. 30
Investors have complained about what they see as a lack of transparency in Puerto Rico's finances. The new policy of posting regular liquidity updates appears to be an attempt to redress that. (Reporting by Edward Krudy; editing by Andrew Hay, Chizu Nomiyama and Bernard Orr)
By Edward Krudy
UPDATE 3-Puerto Rico forecast assumes $1.3 bln financing by year-end
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