With Wall Street snatching up the Guam bonds, residents’ long overdue tax refunds and a portion of the COLA awards can now be released by the first week of December.
“I am delighted with the news from New York. The market reception for the bonds sends a strong message that our decision to pay out the tax refunds is being acknowledged as an important element of our overall fiscal stabilization plan,” Gov. Eddie B. Calvo said in a statement.
After a two-week investor road show, the governor, key members of his administration, and representatives of the Guam Economic Development Authority met individually and in groups with 19 institutional accounts of which over half submitted orders totaling $305.6 million.
The administration said this strong reception from the bond market is directly associated with the pre-marketing efforts led by the governor.
With the subscription window set to open for 90 minutes, it only took about 60 minutes for over one billion dollars in orders to be received.
According to the governor’s office, the competition for the bonds was so great that the final interest cost came in at a record low of 4.94 percent.
To put this into perspective, the government of Guam has been paying an average of 6.27 percent in interest for overdue tax refunds since 1998.
The agreement for the $235 million bond that sold on Wall Street has already been signed by the governor and Attorney General Leonardo Rapadas.
The agreement sets in motion the next step for overdue tax refunds to be released by Dec. 5, 2011, along with COLA payments.
“This brings us one step closer to paying tax payers what they are owed and another step closer to stabilizing the government’s finances,” Calvo said. “We have a lot of work ahead but there’s no doubt in my mind that the people of Guam can achieve anything. This bond is proof that we’re on the right course.”
The bond agreement locks the government of Guam into an interest rate of 4.94 percent for 30 years. The interest on millions of dollars in overdue tax refunds were paid at an average of 6.27 percent since 1998.
