The $300 million in bonds approved by the 23rd Legislature late last month have been sold. The proceeds will enable the government to meet payroll through the end of the year.
Although the bonds received a BBB-minus rating, PaineWebber, the underwriter of the bonds, found 49 interested investors, a Friday Government House release stated.
The bond interest rates averaged about 4.2 percent and 6.2 percent, the release said. The bonds are secured by the territory's gross receipts tax revenues.
Gov. Charles Turnbull termed the bonds' investment-grade rating "strong" and said this reflects market confidence in his administration's economic policies. A demonstration of that, he said, was the recent signing of the government memorandum of understanding with the U.S. Interior Department.
The bond issue will enable the government to meet many of its current obligations and cover operations through the end of the calendar year.
"Even though the financing has been completed and will accomplish several important initiatives, we must continue with our efforts to reduce the size of government," Turnbull said. "Our investors expect the government to fulfill our obligation in the memorandum of understanding . . . and will be monitoring our progress."
Had the Legislature not given Turnbull authority to seek the bonding, the administration said, the government would have been $39 million short of meeting payroll by the middle of November or December. Turnbull had threatened as many as 2,500 government layoffs if the bond authorization was denied.
The governor asked the Legislature for the authority to borrow $130 million. But on Oct. 12, senators voted 12-3 to amend his proposal to authorize the Public Finance Authority to issue up to $300 million in bonds to fund a working capital loan.
Some $136 million will go toward tax refunds, $46 million will go to pay vendors, $30 million is earmarked for bonding services and escrow, $30 million will be used to repay a Banco Popular loan and $15 million will go into the Government Employes Retirement Fund. The balance will go for payroll expenses.
