SAN JUAN, Puerto Rico/NEW YORK Nov 14 (Reuters) - Puerto Rico is in talks with four bond insurers to insure at least part of up to $2.9 billion in bonds that the troubled U.S. commonwealth wants to issue later this year, the president of the Government Development Bank (GDB) said on Friday.
Puerto Rico is trying to refinance a $2.2 billion loan that the GDB made to the island’s Highway and Transportation Authority (HTA) in a bid to shore up the commonwealth’s finances. Insurance would lower borrowing costs for the indebted U.S. commonwealth, Melba Acosta-Febo told Reuters.
In order to complete the sale, Puerto Rico needs to pass legislation to increase a tax on oil by $6.25 per barrel to $15.50 per barrel. That would generate $178 million in revenue that can be securitized to back the bonds.
“The four insurance companies that insure HTA bonds saw the legislation and commented on it, and part of those discussions were whether we could insure a part of the transaction, not necessarily the whole thing, to get better rates.” Acosta-Febo said. (Reporting by Reuters in San Juan and Edward Krudy in New York)