Juan Carlos Batlle, President of the Government Development Bank for Puerto Rico, does not like the way I characterized his comments at the Bloomberg State & Municipal Finance Conference last week. Here is the transcript of the panel he appeared on, so you can read his comments for yourself.
My criticism of Mr. Batlle was that the citizens of Puerto Rico were getting very little benefit from the government’s auction of a 40 year concession to the Luis Munoz Marin International Airport (LMM). But as I delved further, the situation became much more troubling than I had thought. It appears that Mr. Batlle and Puerto Rico are desperate to raise funds to pay down their massive debt load. Here is what Batlle said at the Bloomberg conference about leasing the LMM (from the transcript):
BATTLE [sic]: So we – for that we need to – I mean, we have I guess many people here know Puerto Rico’s situation in terms of her high debt load. So we have to tackle the issue and we have to start lowering our debt load.
[Former Washington, D.C. Mayor Anthony Williams]: Right.
BATTLE: So we’re using most of the money, and we did it the same with the toll road -
BATTLE: – we use most of the money to pay down debt.
The Puerto Rico Port Authority, which includes LMM airport, raised $669 million in bonds on December 16, 2011, and warned investors that the LMM lease arrangement must be completed. The Official Statement (page 5) warned investors that unless the deal to lease LMM were complete, then the Government Development Bank (GDB) would have to make principal and interest payments on the LMM bonds under GDB’s Letter of Credit.