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Jump to full article: The Wall Street Journal Interactive Edition, 2002-09-26
Author: David Feldheim, Dow Jones Newswires
Intro: September 26, 2002 1:19 p.m. EDT
NEW YORK -- In what is believed to be the first issuance of a tobacco settlement refunding bond, Puerto Rico plans to sell $1.1 billion of tax-exempt Children's Trust Tobacco asset-backed bonds early next week, according to Salome Galib, director of the Government Development Bank for Puerto Rico.
The commonwealth has pledged 100% of its tobacco Master Settlement Agreement payments to debt service for the offering, said Steven Moffitt, an associate director at Fitch Ratings. He said Puerto Rico would benefit from the current low interest-rate environment that makes the refunding feasible.
In the initial offering, 50% of tobacco revenues were pledged to pay off a $397 million issue. The refunding would raise close to triple the proceeds, while only doubling the commitment of the MSA payments.
Proceeds from the sale will also finance infrastructure projects on the island, Galib said. Although the initial bond offering limited the use of proceeds to projects benefitting children, Galib said the new offering contains no such restrictions.
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