The Virgin Islands Public Finance Authority sold $49.6 million of Gross Receipts Taxes Bonds on Wednesday, a sale Gov. John deJongh Jr. said would address a range of needs approved for funding by the Senate.
Government House announced news of the sale Wednesday night and, according to the statement, the bonds will provide working capital for the General Fund and hospitals and the payment of WAPA receivables, among other things.
“The market continues to support Virgin Islands issues,” said David Paul, the financial advisor to the PFA. “Institutional investors continue to do their homework and continue to respond positively. The credit spreads to the triple-A scale was the narrowest that we have seen for Virgin Islands paper. That is a great vote of confidence for the territory.”
In the statement, DeJongh took note of the continuing strong support from the investment community.
“We continue to keep the bond rating agencies and institutional investor apprised of both our challenges and our plans to address those challenges," the governor said. "We have been gratified by the scrutiny that investors have done and the affirmation of progress that the demand for our bonds represents.”
“There are a lot of challenging situations for municipal bond investors today, and we have worked hard to make sure that the investment community has complete transparency about our efforts,” deJongh said.
The tax-exempt bonds were sold at a true interest cost of 4.04 percent for the 20-year bond issue. The yields on the serial bonds from 2015 to 2019 ranged from 0.95 to 2.25 percent, and the yields of the three term bonds in 2024, 2029 and 2034 were 3.40, 3.85 and 4.10 percent respectively. According to Government House, that represented a 125 basis point (1.25 percent) spread to triple-A rated bonds.
Finance Commissioner Angel Dawson, who as executive director of the Public Finance Authority led the financing effort, said this is a good time to be in the market.
“We will now have resources available to help our hospitals and WAPA with critical cash flow needs, and make a dent in the General Fund needs as well,” Dawson said.