Bond Sale by PFA Funds Construction of Wastewater Facilities at Cruzan Rum Distillery

Governor John P. de Jongh, Jr. said Wednesday that the Virgin Islands Public Finance Authority has sold $39 million Subordinated Revenue Bonds, Series 2009A. The bonds were sold to provide funds to construct wastewater facilities to address long-standing effluent disposal issues at the Cruzan VIRIL, Ltd. rum distillery. The bonds were sold by a banking team led by Citigroup Global Markets and JPMorgan Securities. The bonds were sold at an interest cost of 5.96%.

The governor applauded the bond sale. “We are pleased to have secured the capital to finally deal with this long-standing environmental problem. This project resolves an issue that has been at the top of my environmental agenda and marks a major step toward our goal of making the Virgin Islands the only major rum producing economy in the world truly protective of the environment.”

“The ability for Cruzan to now address its environmental issues will allow for production levels to increase, thereby generating more Matching Fund revenues. It is the prospect of this new revenue growth that enabled us to borrow the necessary funds to avoid layoffs and furloughs of government employee and to ensure that monies are circulated in our economy during this difficult time. This means funding to continue education programs, and meet critical health and social needs, and the capital to push forward critical capital projects to prime the pump on private sector employment for our local contractors and their employees,” de Jongh added.

The pricing of the bonds enjoyed wide spread support among institutional investors. “As we expected, there was significant demand for our bonds from across the investment community, which allowed us to push the interest cost below 6.00%,” Julito Francis, the Director of Administration and Finance at the PFA said. “The bonds were over-subscribed, as we received $400 million of orders. This allowed us to reduce the interest cost on the bonds to levels below the general obligation bonds of Puerto Rico that were in the market at the same time. Citigroup and the entire financial team did an excellent job.”

“After receiving investment grade bond ratings on these bonds, we knew the next step was to assure an orderly reception in the market,” said Finance Commissioner Angel Dawson. “With each bond transaction, we have continued to build our following in the investment community and make sure that we have continued and ready access to capital when we need it for these important projects. This sale is one more step forward for the Virgin Islands.”

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