Puerto Rico plans to sell a $500 million municipal sales tax based bond in fiscal year 2015.
The bond was announced in the Agenda for Economic Recuperation, 2014-2018 released recently by Puerto Rico's government.
Proceeds from the sale of COFIM bonds, backed by municipalities' portion of the island's sales tax, will allow the Government Development Bank of Puerto Rico to refinance municipal debts backed by sales and use tax revenues and enable the municipalities to finance new public projects, the agenda report said.
In January, Puerto Rico Gov. Alejandro García Padilla signed laws that created a structure similar to the Puerto Rico Sales Tax Financing Corp. (COFINA) for the municipalities. A 1% portion of the sales tax will pass through this new vehicle, known as COFIM, and allow the municipalities to sell bonds backed by this sales tax sliver.
Puerto Rico's fiscal year 2015 will run from July 1, 2014 to June 30, 2015.
As of June 2013 Puerto Rico's municipalities had $3.88 billion in outstanding debt.
