In a move showing that Garvees, like Build America Bonds, are subject to the risk of federal offsets, the U.S. government has reduced transportation funds backing Puerto Rico’s Garvees to make up for the Commonwealth’s failure to pay money owed to a federal agency for river projects.

The action could have wide-ranging implications for Garvee bonds, leading bond issuers and investors to re-appraise their risk, Municipal Market Advisors warned in a recent outlook.

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