The V.I. Public Finance Authority unanimously authorized a $320 million Gross Receipts Tax bond issuance Tuesday, paving the way for a bond sale in the near future. The amount authorized is somewhat greater than the roughly $280 million in revenue being sought.
"It is customary for the PFA Borrowing Resolution to authorize a higher amount than the principal amount of the bonds, to allow some flexibility. However, the principal amount actually issued is controlled by the actual balances outstanding (in the case of refinancing) and/or the authorizing legislation," said Finance Commissioner Angel Dawson at Tuesday’s meeting.
The bond funding will include about $196 million to refund outstanding high-coupon bonds issued in 1999 as well as to refinance outstanding bank loans and bonds that funded working capital and ongoing operations of the government, with the hope of cementing in a lower, fixed rate.
The government recently received favorable reviews from two major bond rating agencies: Fitch and Standards and Poor’s, and Fitch confirmed its BBB rating and S&P confirmed its BBB+ rating for this bond issuance, giving the government a better shot at good terms and interest rates.
The bond issuance will also provide about $30.4 million for matching funds for the V.I. Next Generation Network’s federal grants, replacing a higher-interest-rate bank loan. It also includes about $50 million for an array of capital projects and energy savings projects which are currently under consideration by the Senate. The bonds will be issued in several series, and the one for the capital and energy projects "will likely be issued subsequently, depending upon the Legislature’s actions," Dawson said.
The Rules and Judiciary Committee will consider legislation authorizing those projects and the bonding Wednesday morning.
Prior to adjournment, the board left open the option to meet ‘sooner than later’ based upon the outcome of Wednesday’s legislative session.
In other business, the PFA approved a $285,000 settlement agreement with Wachovia Bank. The funds are the territory’s share of a much larger nationwide settlement with the U.S. Department of Justice in which Wachovia denied wrongdoing, but agreed to pay $148 million to settle charges it rigged municipal bond bids. (See related links below.)
Present at Tuesday’s monthly meeting of the PFA board were Executive Director and Finance Commissioner Angel E. Dawson, Office of Management and Budget Commissioner Debra Gottlieb, and Keith O’Neale Jr. Gov. John deJongh Jr. chaired the meeting.