Puerto Rico General Fund net revenues came in 24% ahead of projections in November.
For the first five months of fiscal 2020 these revenues were 21% ahead of projections, according to the Puerto Rico Treasury.
However, revenues in the five-month period were 5% below those in the prior fiscal year.
Puerto Rico Secretary of the Treasury Francisco Parés Alicea highlighted sales and use tax revenues in November as contributing to the strong showing. They came in at $229.8 million, compared to the $133.7 million that was projected and the $128.6 million collected in November 2019.
The strong showing was because the Puerto Rico Sales Tax Financing Corp. (COFINA), which uses this revenue stream, finished collecting its share in mid-October, Parés Alicea said. COFINA collects money for COFINA bonds.
Individual income tax revenues also did well, coming in at $145.7 million, compared to the projected $105.9 million and the $126.8 million found in November 2019.
The weakest category was the Law 154 excise tax on foreign corporations, which came in $46.1 million less than projections.
In the first five months of the fiscal year, the categories that most exceeded last year’s performance in dollar terms were the sales and use tax ($226.1 million) and the "other" category ($205.1 million). The categories that most lagged in dollar terms were the corporate income tax ($606.2 million) and Law 154 excise tax ($146.2 million).
Revenues coming in ahead of projections may be a factor in a recent rally of Puerto Rico general obligation bonds on the secondary market. As of Oct. 29 the Puerto Rico GO 8% maturing in 2035 was selling for 59.75 cents on the dollar, according to IHS Markit. On Thursday it traded at 71.5 cents on the dollar.
Asked about the rally, Municipal Market Analytics Partner Matt Fabian said, “It may be Trump’s filling out the [Puerto Rico Oversight] membership, reducing the chance of immediate interference from the Biden administration. Or it could be the start of a new year, when risk taking usually rises.”
