The U.S. Virgin Islands sold its rum-tax collections to bondholders for $955 million, closing a securitization deal intended to refinance existing debt and replenish an ailing government pension fund.
The territory’s debt sale was priced to yield 4.73% on a longest-dated maturity of 2039, according to a person familiar with the matter.
Proceeds from the deal would refinance existing rum-tax bonds, freeing up short-term savings by capitalizing interest payments through 2025. Those savings would be used to prop up the Government Employees Retirement System, which faces insolvency as soon as 2024 without a cash infusion.
The securitization debt provides bondholders with stronger collateral rights over the rum taxes, a key public asset of the Virgin Islands.
Write to Andrew Scurria at andrew.scurria@wsj.com
(END) Dow Jones Newswires
March 31, 2022 17:39 ET (21:39 GMT)
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Read More: U.S. Virgin Islands Sells Tax Collections to Bondholders for $955 Million to Save Pension