PRASA Bond Bill Debate Degenerates Into Verbal Brawl

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A debate about a bill to help the Puerto Rico Aqueduct and Sewer Authority sell a bond has degenerated into angry exchanges between Puerto Rico House and Senate leaders.

Puerto Rico Sen. President Eduardo Bhatia Gautier says the bill should allow PRASA to sell $900 million in new money bonds through a new securitized authority. However, Puerto Rico House President Jaime Perell- Borrás has stated the bill should also allow PRASA to sell up to $750 million in refinancing bonds.

PRASA president Alberto Lázaro Castro said that if he cannot get the House version by the start of July, he will have to seek a water rate increase, according to the Puerto Rico Senate press office.

PRASA increased its water rates by 60% in the second half of 2013 with an aim to covering operating expenses, debt service, and providing reserves through the end of fiscal year 2017. However, PRASA also assumed it would be able to sell a bond to cover capital improvement expenses.

Because of decisions by the Government Development Bank for Puerto Rico and Puerto Rico's low speculative grade credit, PRASA hasn't been able to sell a bond, according to a House of Representatives press statement. It attempted to sell one in later summer 2015.

Responding to Lázaro Castro's statement about a possible water rate increase, Bhatia Gautier said that he would not give in to "blackmail."

In a press statement, Puerto Rico Senate Majority Leader Anibal Jose Torres criticized an effort in the House to reject Senate bills until the Senate approved a version of the PRASA bill amenable to the House.

According to the El Vocero web site, Bhatia Gautier lambasted this House effort as "blackmail" and "abduction" to which he would not bend. In a middle of a speech in Spanish he switched to English and said, quoting Harry Callahan from the film "Dirty Harry:" "Go ahead. Make my day."

Puerto Rico House of Representatives President Perell- Borrás responded in a public statement that Bhatia Gautier's statements had been "intemperate." Perell- Borrás said he was focused on avoiding a PRASA rate increase. He called for work on a consensual agreement with the Puerto Rico Senate. Both Perell- Borrás and Bhatia Gautier are members of the same party.

According to a staff member for Bhatia Gautier at this point the Senate and House are in conference committee over the water and sewer authority bill.

El Vocero quoted Bhatia Gautier saying of PRASA leaders, "I told them to seek an official restructuring. I told them to sit with the bondholders." Neither Bhatia Gautier nor one of his spokespeople could be reached for an explanation of this statement.

In late May PRASA chief financial officer Efraín Acosta told The Bond Buyer that all the money for the authority's July 1 payment was in the hands of its bond trustee.

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