The CNMI government may be authorized to float a bond of up to a maximum of $300 million but Finance Secretary David Atalig says it is unnecessary to float that much amount and is opting to float only $65 million once the Commonwealth government gets the bond ratings.
Atalig told Saipan Tribune over the weekend that his office believes it is unnecessary to float a $300-million bond.
“I don’t see the need for all that [$300 million] upfront now and then owe an increased debt and payment, so it gives me the option to borrow and take care of the $17.6 million [Alternative Payment of a Greater Amount] payments for fiscal year 2017 and one fiscal year of minimum annual payments to the Settlement Fund,” he said. “That total is close to $65 million. Why we won’t go for more? …We don’t need to borrow [money] if we don’t need [the money],” he said, adding that the authorization to float a bond worth up to $300 million is flexible for future use when needed.
Atalig said that future payments for the bond are banking on an improved CNMI economy. “We are hopeful that the economy will rebound,” he said.
The $65-million bond is just enough to satisfy the Commonwealth government’s obligations to the Settlement Fund in fiscal year 2017 (APGA) and minimum payments for fiscal year 2020, Atalig noted in an earlier interview.
With the $65-million bond, it could open up more resources for other programs and agencies that need funds, he had said.
As of yesterday, Atalig did not confirm whether the bond rating for the CNMI government has been received. He previously stated that the CNMI’s ability to float a bond hinges on that bond rating.
A bond rating is a rating from independent agencies, in this case from Moody’s Investor Service, that measures the Commonwealth government’s financial capability to make interest payments and repay the principal of the bond.
Once the ratings have been received, Atalig said, it would go out to the government’s bond consultants as well as its bond issuers for review. He noted that his office is aiming to float the bond before 2020.