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Government Dream Team Seeks Improved Credit Rating

Old pros and new kids on the block work together for formal presentations to Moody’s and Standard & Poor


April 26, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

Government Development Bank (GDB) President Juan Agosto Alicea and the government’s top economic team were expected to make formal presentations of the government’s financial situation and future projections to New York credit rating agencies early this week.

The presentations precede a $425 million general obligation bond issue scheduled for mid May. Treasury Secretary Juan Flores Galarza said the team would make three-hour separate sessions to credit analysts at Standard & Poor (S&P) and Moodys on Monday and Tuesday in New York. The effort comes in the wake of Moody’s downgrade of the commonwealth’s general obligation bond rating outlook from positive to stable earlier this month.

Aside from Agosto Alicea, Economic Development and Commerce Secretary Ramon Cantero Frau, and GDB Finance Vice President Jose Pagan, the team’s other members, including Budget and Management Director Melba Acosta, would be making their debut in front of the credit rating institutions.

Pagan said the team anticipated returning to Puerto Rico with the same credit rating the island has enjoyed for years. Moodys has given the commonwealth a Baa1 rating while S&P rates it A. The GDB is rated A+ by S&P.

Pagan said the target is to close a $425 million general obligation bond issue for 10 projects–mostly Puerto Rico Aqueduct & Sewer Authority infrastructure–during May.

"Two weeks ago, we hoped for a $1.5 billion bond issue, allowing us to refinance part of the $5 billion plus public debt, but we depend on the market. If markets improve when we’re ready to close, the issue could be larger," he said.

"They (the credit rating agencies) know Puerto Rico very well. Last month, they met with the governor and us. They’re interested in our public debt management policies and the course of action we’ll take," added Flores Galarza.

Pagan added that analysts want an overview of the current fiscal situation and projected revenue and expenses for fiscal year 2002.

"We will explain the measures we’ll take to make expenditures match revenue as well as discussing the economy, employment, new Puerto Rico Industrial Development Co. promotions, and the Planning Board’s projected economic growth. It’s good that we have had conversations with analysts and we plan to keep them informed of audited financial statements and cash flow on a regular basis. They also have specific questions, such as the urban train," Pagan said.

This Caribbean Business article appears courtesy of Casiano Communications.
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