Gov’t eyes bond float next year

The government is eyeing the first two months of the new year to launch the proposed of $60 million bond float that will be used to match federal construction grants under the capital improvement projects.

Finance officials and lawmakers are expected to discuss today ways on how to carry out the plan, which is part of the financing scheme approved recently by the Legislature, with investment firm Paine Webber hired to underwrite the bonds.

House Ways and Means Committee Chairman Karl T. Reyes said the meeting will focus on scheduling the sale of the bonds so that the government can line up projects to be funded by its proceeds.

“We are trying to figure out a way when we can get that floated. By meeting with Paine Webber, we will probably be able to know whether we are going to see that bond floated very soon,” he said in an interview.

The Commonwealth Development Authority approved last month the plan, along with the $30 million interim financing entered into with Bank of Guam. Half of the proceeds of the bond sale will be set aside to pay off the bank loan.

CDA has chosen Paine Webber to handle the tax-exempt municipal bond float from a list of reputable underwriters that have submitted proposals to the authority. These actions are part of the recently-signed law that allows the agency to undertake the financing scheme.

According to Reyes, once a concrete plan has been reached with the investment firm, the Legislature will then pass an appropriate measure to fund specific projects included in the original CIP master plan.

“Based on those things, implementation of the project can be scheduled, but the legislation to address individual needs is going to be there. There is no problem on the local side,” he added.

Any problem may crop up on the Paine Webber’s side, said the representative, noting that it is all up to how fast the underwriter can attract investors to buy the bonds.

“I will not be able to say (when the money will be released) because everything hinges on the ability to float it based on (the standing of) our economy and the interest rates that we can be given based on our ability to pay,” Reyes explained.

The Ways and Means chairman, however, expressed hope that the initial batch of the money will come by January or February next year so that the government can start drawing up another CIP program.

So far, the CNMI has already raised nearly $42 million to meet the dollar-for-dollar matching obligations and will need at least $35 million to spend the remaining balance for a total of $77 million under its CIP/702 Covenant share.

The government is scheduled to receive next week the BOG loan after it has provided bank officials a drawdown schedule.