The Virgin Islands Public Finance Authority will sell roughly $400 million of tax-exempt bonds Thursday backed by rum-tax revenues to help the U.S. Virgin Islands balance its fiscal 2010 budget.

The territory is addressing a revenue shortfall by reducing spending. It is also borrowing funds to help meet expenses by issuing bonds. Proceeds of its Series 2010A senior-lien and Series 2010B subordinate-lien bonds will be used to loan $150 million to the USVI’s general fund and refinance up to $200 million of outstanding bank loans that are due, according to the preliminary official statement.

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