The Virgin Islands Public Finance Authority sold $49.6 million of Gross Receipts Taxes Bonds on Wednesday. According to Governor John P. de Jongh, Jr., the bonds were issued to address a range of needs approved for funding by the Senate, including working capital for the General Fund and hospitals, and the payment of WAPA receivables.
The tax-exempt bonds were sold at a true interest cost of 4.04% for the 20-year bond issue. The yields on the serial bonds from 2015 to 2019 ranged from 0.95% to 2.25%, and the yields of the three term bonds in 2024, 2029 and 2034 were 3.40%, 3.85% and 4.10%, respectively, which represented a 125 basis point (1.25%) spread to triple-A rated bonds. Investor demand was strong, as mutual fund companies and asset managers put in significant orders for each tranche of the bonds, allowing the interest costs on each of the term bonds to be pushed down by ten basis points.
De Jongh 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. 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.”
“This is a good time to be in the market, and a good time for the investment community to come on board. We greatly appreciate the strong support for this issue,” commented Commissioner of Finance Angel Dawson, who as Executive Director of the Public Finance Authority led the financing effort. “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.”
“The market continues to support Virgin Islands issues,” remarked 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.”