SAN JUAN — Puerto Rico plans to issue $295 million of new-money general obligation debt by June 30, its first such borrowing in more than two years.
Officials are also looking to move forward on two major public-private-partnerships — a long-term lease of the island’s busiest toll road and one of its main airport in San Juan.
The Government Development Bank for Puerto Rico, the commonwealth’s fiscal adviser, announced on Friday at its annual credit conference held outside of San Juan that Puerto Rico’s new-money GO deal will total $295 million. Puerto rico last sold new-money GO debt in September 2008. It has issued new-money debt through its sales tax credit, which carries double-A ratings.
Fitch Ratings and Standard & Poor’s rate Puerto Rico’s $9.2 billion of outstanding GO bonds BBB-plus and BBB, respectively. Moody’s Investors Service assigns the credit an A3.
“Although the markets are sensitive, we believe that we can do it in a timely manner and we’ll work with the underwriting team to make sure we get a good execution and a good deal for Puerto Rico,” GDB president Juan Carlos Batlle told The Bond Buyer after the conference.
The Legislature will weigh in on the proposed $295 million of GOs. Other upcoming sales include $900 million of tax and revenue anticipation notes and a taxable GDB note refunding, both set to price by June 30. A $150 million Puerto Rico Public Buildings Authority debt restructuring may price this year and the GDB is also working on $750 million of qualified school construction bonds that would sell in the local market.
In addition, officials are working on a potential sales tax borrowing that would include refunding and new-money bonds, as well as a new-money bond deal for the Puerto Rico Electric Power Authority. The GDB has yet to work out the sizes of the transactions and when they might head to market.
The island is also working on entering existing facilities into long-term lease agreements in return for up-front payments. Bid proposals on Route 22 and Route 5 are due by May 18 and the officials anticipate announcing a winning bidder in early June and closing the transaction this summer. The concession agreement would last for 50 years.
Route 22 runs east-west for 52 miles through the north side of the island, including San Juan. The four-mile Route 5 is connected to Route 22. Bond proceeds helped build and maintain those toll roads. Those bonds will need to be repaid in order for Puerto Rico to enter them into a concession agreement. The Puerto Rico Highways and Transportation Authority oversees several roadways, including Routes 22 and 5, and has $7.2 billion of bonds outstanding.
David Alvarez, executive director of the Puerto Rico Public-Private Partnerships Authority, declined to specify the exact amount of bonds outstanding on Routes 22 and 5.
In addition, officials have secured a verbal agreement with the air carriers serving the island’s busiest airport, the Luis Muñoz Marin International Airport, for a long-term lease of the facility, Alvarez said.
He is working on finalizing those agreements with the airlines and plans to release a request for qualifications from interested concessionaires in June. A request for proposals would follow in December.
Officials are now identifying which of the Puerto Rico Ports Authority bonds are connected to the airport. Alvarez said the airport’s outstanding debt “is in the hundreds of millions.”