Bond sale closed by June 17
Tuesday, 09 June 2009
by Therese Hart
Marianas Variety News Staff
THE sale of government of Guam bonds will be finalized by June 17 and the money will be in the government account the next day, according to Tony Blaz, administrator of the Guam Economic Development Authority, who just returned from New York after successfully marketing the landfill and general obligation bonds.
“I’m happy that the landfill bond sold, but I’m also happy that our manamko will finally receive their COLA money. They’ve waited so long for this and when they pass on without seeing that money, it’s a sad day. We have to remember that they built this government through their hard work and dedication,” said Blaz.
The government of Guam successfully sold $473.5 million of triple tax-exempt bonds in the municipal market last week in New York—historic bond sales—which marked two of the first large high-yield transactions since the global financial fallout of the municipal market in fall of last year.
The two bond issues included $270 million of general obligation bonds, rated “B+,” and $202.4 million limited obligation Section 30-backed bonds, rated “BBB-.”
The successful issuance of the $270 million debt service bonds will pay for overdue tax refunds, a court-ordered cost of living allowance and other government debts.
The $202.4 million Section 30 bonds will pay for the construction of the new landfill as well as the closure of the Ordot dump.
“These people did their part. I know many people have said, hey, we don’t need to take care of them. But these people helped build the government of Guam and we have to be grateful,” Blaz said, referring to the government retirees who are owed their COLA.
Blaz acknowledged that it was a long standing obligation that should have been addressed decades ago. “But we didn’t. And today, we delivered for the people of Guam. This governor made it happen,” he said.
Overwhelming investor interest led to adjusted bond yields downward on both transactions, saving over $100 million in debt service on the general obligation bonds and over $56 million in debt service on the Section 30 bonds, compared to estimates a few weeks, according to a Guam Economic Development Authority press release.
The final yields ranged from 6.20 percent to 7.18 percent for the general obligation bonds and 3.95 percent to 6 percent for the Section 30 bonds.
“This was well below the interest rates that the government anticipated even a few weeks ago, and below the interest rate caps set by the authorizing legislation,” said Blaz.