The Government Development Bank for Puerto Rico Monday evening announced that its acting president and chairman of the board, Alfredo Salazar, will leave his positions at the bank as he begins his campaign for the U.S. Congress as resident commissioner for Puerto Rico. Salazar, a member of the Popular Democratic Party, will continue at the GDB “until he completes the bond issues scheduled for the next few months,” and begins campaigning full time, according to a press release. As financial adviser to the commonwealth, the GDB is currently working on a $6.5 billion to $9 billion pension bond deal with Merrill Lynch & Co. that may price in September or October, and has yet to price a $1.5 billion general obligation refunding that officials postponed in early June due to a hike in interest rates. Also on the list of upcoming deals is a $930 million sale on behalf of the Puerto Rico Aqueduct and Sewer Authority in August and the government will return to the market in August or the fall with a $875 million tax and revenue anticipated note deal. Hector Mayol, managing director at Samuel A. Ramirez & Co., said Salazar’s long history in public finance has enabled the acting president and chairman of the board to take a more hands on approach.“He certainly has been involved personally in what normally the chairman of the board of the GDB would not get involved in, the detail of actually looking at how the market is behaving and how the deals should be priced and when it should come to market,” Mayol said. The GDB recently issued $2.7 billion of tax-exempt debt on behalf of the Puerto Rico Sales Tax Financing Corp., the island’s first-ever sales-tax deal which also offered the largest amount of capital appreciation bonds ever in the municipal market and had the longest maturities ever for a municipal bond. The transaction will help the commonwealth pay down its $6.8 billion of appropriation debt; the island’s so called extra-constitutional debt, which it owes to the GDB. In the past, the bank wrote checks to the government to help fill budget gaps, a process that officials are now prohibited from doing thanks to fiscal reforms implemented last year. Details on when the GDB will begin searching for Salazar’s successor were not available by press time, but the Mayol believes that the acting president has created a solid management team that will be able to take on the transition. “I think the GDB certainly has a group of public finance professionals that have been there for quite some time that are experienced,” Mayol said. “Mr. Salazar also has a [group] of young public finance professionals that I’m sure will be able to carry on. I don’t see it necessary that there would be an unusually difficult transition other than the fact that it will be difficult to fill his shoes.” The island’s current resident commissioner is Luis G. Fortuno, a member of the New Progressive Party. The resident commissioner is a four-year, elected position within the U.S. House of Representatives. While resident commissioners serve on congressional committees and have the same functions as U.S. Representatives, they do not have voting power.
