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Governor signs bill to extend bond terms to 15 years

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GOVERNOR Ralph DLG Torres signed into law a bill to increase from five to 15 years the term of bond anticipation notes.

House Bill 21-111, which was unanimously passed by the House of Representatives and the Senate, is now Public Law 21-24.

Authored by Rep. Ralph N. Yumul, the measure provides the Commonwealth Development Authority with more flexibility in issuing general obligation bonds or pension obligation bonds by extending the maturity of bond anticipation notes from five years to 15 years. The new law also clarifies the forms of obligations that may be used as bond anticipation notes.

P.L. 21-24 defines bond anticipation notes to include notes, loans, lines of credit, and other instruments of indebtedness. The full faith and credit of the Commonwealth, the law says, “shall be pledged to the payment of the principal and interest of the notes.”

It further states that the issuance of the notes and their details “shall be governed by the provisions of the Act with respect to bonds insofar as it may be applicable, provided, that each note, together with all renewals and extensions, or refunding by other notes issued pursuant to this section, shall mature within 15 years from the date of the original.”

Extending the bond anticipation term, Yumul said in an interview, will reduce the monthly, quarterly, or yearly bond payments.

Right now, he said, the government’s payment for an existing bond is appropriated annually. Because of its cash flow problem, the CNMI government cannot afford to pay a higher amount annually if the bond term is for five years only.

 

 

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