Rosy economy seen due to $60-M bond float

Next month’s flotation of the $60 million municipal bond, which will be used to finance major infrastructure projects, will bring about the much needed push to the Northern Marianas economy, according to Development Authority Executive Director Marylou S. Ada.

Ms. Ada is confident hundreds of job opportunities will be created in the local economy once the CNMI government starts rolling the ball for Capital Improvement Projects, funded under Section 702 of the Covenant.

The CNMI gets $11 million annually for CIPs. The $60 million bond has been identified to declog the bottleneck of unused CIP funds that has been accumulated by the CNMI.

Officials are upbeat that the $60 million bond, which will be used to match federal grants for CIPs worth $120 million, may translate to over $400 million in fresh money circulating within the Northern Marianas economy in four years.

According to Ms. Ada, flotation of the bond to finally get in use federal money earmarked for public infrastructure projects entails new direct investments within the construction industry, as well as in other business sectors particularly retail.

The Governor’s CIP Task Force has completed the seven-year spending plan for $154 million in new capital infrastructure projects.

CDA has waited several months to float the $60-million bond in attempts to sell the proceeds at a time interest rates in the mainland United States economy are low. The bond is scheduled to be traded on Dec. 6, 2000.

CDA has been hard-pressed to double its efforts in getting a good deal for the $60 million bond amid the Commonwealth’s stagnant economy.

The municipal bond has been in the offing since last year but was not immediately floated due to economic difficulties and higher prevailing interest rates, resulting to the dragging completion of major infrastructure projects in the Northern Marianas.

Ms. Ada said the fact that investors are still interested to pour in money into the islands as indicated by the scheduled flotation of the municipal bond on Dec. 6, 2000 proves that business confidence in the CNMI continues to be strong.

Considering that bond flotation is a very complicated and tedious process, Ms. Ada said the Commonwealth’s current financial situation made it even tougher for CDA’s United States-based underwriters to find buyers for the tax-exempt bonds.

The government-controlled lending agency has originally stretched the expected time-frame for the flotation of the municipal bond up until October, when interest rates are traditionally lower.

Paine Webber, which handled the $16 million bond floated by the Public School System last year, handled the flotation of the $60 million municipal bond.

Half of the total $60 million bond proceeds will be used to pay the $30 million borrowed by the CNMI government from the Bank of Guam.

The interim financing was decided by the CDA board to nourish the economy with infrastructure projects identified in the 702 CIP Master Plan.