Puerto Rico OKs $304M of GOs for Transportation, Other Needs

Puerto Rico Gov. Luis Fortuño Wednesday signed into law a $304 million general obligation bond bill that will help support transportation and other capital needs throughout the island.

Officials anticipate selling the tax-exempt GO bonds by June 30. Nearly one-third of the proceeds will help finance road and bridge improvement projects.

“We all know the highways on the island are in deplorable conditions,” Fortuño said in a statement. “Overuse and the conditions of the time contribute to their constant deterioration. With this injection of $304 million, we will begin to give you the streets that you deserve.”

The commonwealth last sold new-money GOs in September 2008.

Moody’s Investors Service earlier this month placed the GO credit on watch list for possible downgrade due to high unfunded retirement obligations. Moody’s rates Puerto Rico’s $9.3 billion of GO debt A3. Standard & Poor’s and Fitch Ratings rate it BBB and BBB-plus, respectively.

In addition, Puerto Rico officials anticipate announcing this month a winning long-term concession bid for its busiest toll road after the government Tuesday received two offers from private operators. David Alvarez, executive director of the Puerto Rico Public-Private Partnerships Authority, declined to reveal the size of the bids.

Goldman Sachs Infrastructure Partners II LP and Abertis Infraestructuras of Spain submitted one bid while OHL Concesiones of Spain and Morgan Stanley Infrastructure Inc. also filed a proposal. The winning bidder will operate, maintain, and collect tolls on Route 22 and Route 5 for 50 years. Route 22 runs east-west through the island’s northern region, including San Juan.

Puerto Rico will use a portion of the up-front payment for the concession rights to pay down outstanding bonds connected to Routes 22 and 5. Officials have yet to announce how much is outstanding on the two toll roads.

The Puerto Rico Highways and Transportation Authority oversees several ­roadways, including Routes 22 and 5, and has $7.2 billion of bonds ­outstanding.

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