Archival Center and Library to Benefit, Along with Gallows Bay and Annaly Bay Projects in St. Croix; Investment Grade Rating Received by Territory Enabled Favorable Premium, Saving $Millions
New York, NY September 28, 2006: The Virgin Islands Public Finance Authority today announced that it has sold bonds totaling $219 million, refinancing portions of the territory’s 1999 Gross Receipts tax bond. The economic refinancing of the bonds realized interest savings of $21 million with the proceeds to be used to help finance the costs of the new library and archival center in St. Thomas, as well as the Gallows Bay and Annaly Bay projects in St.Croix.
As a result of the territory recently receiving an investment grade General Obligation credit rating by both Moody’s Investors Services and Standard & Poor’s, the cost of insurance (FGIC) needed to secure the bonds went down significantly, providing incremental savings of $6 million.
Governor Charles W. Turnbull said, “Only a few weeks after receiving an investment grade bond rating from two of the world’s leading agencies, Moody’s Investors Services and Standard & Poor’s Rating Services, we have benefited by saving millions of dollars in refinancing the GRT bonds. These savings will be used to fund important projects that will in turn spur economic development throughout the territory. We will now look toward addressing the unfunded liabilities in the pension fund, and continue fiscal discipline and financial reporting.”
Standard & Poor’s also raised the bond rating on the Public Finance Authority’s gross receipts tax and GO loan note bonds up to BBB+ from BBB based upon the solid debt service coverage. The Gross Receipt Bonds were triple A rated bonds, the highest rating given on municipal bonds as a result of the insurance coverage. The triple tax-free bonds were sold quickly and were oversubscribed. All in TIC (true interest cost) for these bonds was 4.38%.
Kent Bernier, Director of Administration of the Public Finance Authority, said, “In 1999, when we first sold the Gross Receipts Tax bonds, we were unable to purchase insurance that would provide for a AAA rating. Today, as a result of the economic turnaround led by Governor Turnbull, we are able to go into the financial markets with a investment grade rating and secure financing at the best possible interest rates, thus saving the territory millions of dollars that in turn can be used to improve our standard of living.”
UBS Securities underwrote the bonds. Banc of America Securities acted as financial advisor to the government, and the law firm of Buchanan Ingersoll and Rooney was the bond counsel.
For further information please go to: www.governorturnbull.net