P.R. Laws tit. 7, § 611g
(a) The Bank is hereby empowered to issue its own bonds from time to time, in the principal amounts that are necessary or adequate in the bank’s opinion up to the limit established in this subsection, to provide the funds to achieve any of its corporate purposes, including the payment of interest on the Bank’s bonds and for the term that the Bank determines, the establishment of reserves to secure said bonds, to cover, reimburse, redeem, buy, handle, pay or release any of the Bank’s outstanding bonds; and to pay all the other bank expenses that are incidental to and necessary or convenient for the exercise of its powers and the attainment of its corporate purposes. The outstanding bonds of the Bank shall not exceed, at any time, the aggregate principal amount of two hundred and fifty million dollars ($250,000,000); Provided, That:
(1) Those bonds that are collateralized by stock that:
(A) At the time of their issue have a market value of not less than the total amount of the principal of said bonds, and
(B) have one of the three highest credit ratings from at least one nationally recognized credit rating agency shall not be subject to this limitation, and
(2) those bonds that at the time of issue have a maturity date equal to or less than two (2) years are not subject to this limitation. In order to apply this limitation, the principal of the bonds shall be equal to their selling price on the date they were issued.
The bonds issued by the Bank may be secured by the good faith and the credit of the Bank and shall be payable in whole or in part from the Bank’s revenue from its operations, as provided in the Bank’s trust agreement under which the bond issue is authorized. The principal of, and the interest on any bonds issued by the Bank amy be secured through pignoration of all or part of said revenues and other available funds in the Bank. The trust agreement which secures the bonds may contain provisions that shall be a part of the contract with the holders of the bonds issued thereunder with respect to the pignoration and creation of liens on the Bank’s income and assets, to the establishment and conservation of the sinking and redemption funds, with respect to limitations of the purposes to which the proceeds of the bonds shall be applicable, limitations as to the issue of additional bonds, limitations as to amending or supplementing any such trust agreement, as to the granting of rights, faculties and privileges to the trustees, and the imposing on them of obligations and responsiblities under the trust agreement; the rights, powers, obligtions and responsibilities which may arise in case of nonpayment or noncompliance with any obligation under said trust agreement and with respect to any rights, powers or privileges conferred to the bond-holders as security of the bonds, and with respect to any other matter that is not in conflict with the provisions of this act that may be necessary or convenient to secure the bonds and enhance their market value.
(b) The bonds may be authorized by a resolution or resolutions of the Board of Directors and may be of such series, bear such date or dates, mature on said installment or installments which shall not exceed forty (40) years from their respective issue, accrue interest at such rate or rates that do not exceed the maximum legal rate, be payable in such places in or outside the Commonwealth of Puerto Rico, may be of such denomination or denominations, in the form of bonds with coupons or registered, may have such registration or conversion privileges, may be granted in such form, be payable by said means of payment, be subject to such redemption terms, with or without premiums, may be authenticated in such manner once said conditions have been met, and may contain such other terms and stipulations as provided in said resolution or resolutions. The bonds may be sold publicly or privately at the price or prices determined by the Bank. Notwithstanding their form and text and the lack of an express reference on the bond stating that it is not negotiable, all the Bank bonds, including any coupons belonging to the same, shall have and shall be understood to have at all times all the qualities, properties and characteristics (including negotiability) of instruments negotiable under the laws of the Commonwealth of Puerto Rico.
(c) The proceeds of each bond issue shall be applied only to the purposes for which said bonds shall have been issued and shall be disbursed in the manner and under the restrictions, if any, that the Bank provides in the trust agreement which provides for the issue of such bonds.
(d) Except for the provisions to the contrary of the special provisions note found beneath § 611 of this title, bonds may be issued pursuant to the provisions of this chapter without obtaining the consent of any department, division, commission, board, body, bureau or agency of the Commonwealth of Puerto Rico, and without any other procedure or occurrence of any condition or thing other than such procedures, conditions or things specifically required by this chapter and the provisions of the resolution authorizing the issue of such bonds or the trust agreement securing them.
(e) The bonds of the Bank which bear the signatures or facsimiles of the signatures of Bank officials in office on the date of their signing shall be valid and shall constitute unavoidable obligations, even when any or all of the officials whose signatures or facsimile signatures that appear on them have ceased as officials of the Bank before delivery and payment of said bonds. Any trust agreement that secures the bonds may provide that such bonds may include a statement that they are issued pursuant to the provisions of this chapter, and any bond which includes such a statement authorized by the said trust agreement shall be conclusively deemed valid and issued according to the provisions of this chapter. Neither the members of the Board of Directors of the Bank nor any other person who grants the bonds shall be personally responsible therefor. The Bank is empowered to buy, with whatever funds are available for such purposes, any outstanding bonds issued or assumed by it at a price that does not exceed the total of the principal, or their current redemption value, plus accrued interest.
(f) The bonds of the Bank which are outstanding at any given moment and do not exceed the limit established in subsection (a) of this section, if so determined by the Bank, shall enjoy the additional security of a special reserve fund in which the monies assigned to the Bank shall be deposited and put at its disposal by the Commonwealth of Puerto Rico for the purpose of said special reserve fund. Moneys accrued or credited to any special reserve fund for the payment of the debt established under the provisions contained herein, except as subsequently provided, shall be used exclusively for the payment of the principal of the bonds of the Bank secured by said special reserve fund, as they become due, for the redemption of said Bank bonds, payment of interest on said bonds or payment of any required redemption premium when said bonds are redeemed before maturity; Provided, however, That the monies in any of these funds shall not be withdrawn from them at any time, in an amount which has the effect of reducing the amount of said funds to an amount that is less than the maximum required to be on deposit in credit of said funds, as determined by a resolution of the Bank, except for the payment of principal and interest of the bonds secured by said reserve funds which become due and are payable, and for the payment of which there are no other Bank funds available. Any income or interest accrued or incremented by any of said reserve funds for the payment of the debt originating from the investment thereof, may be transferred to any other fund or account of the Bank, to extent that it does not reduce the amount of said reserve fund for the payment of the debt below the maximum amount required to be maintained in said fund.
In order to further guarantee that said reserve funds are maintained at the required level for the payment of the debt, such amount, if any, must be set aside and paid annually to the Bank to be deposited in each one of the reserve funds for the payment of the debt, that the President of the Bank certifies to the Secretary of the Treasury as necessary to replenish said reserve funds to an amount equivalent to what is required for the payment of the servicing of said debt. The President of the Bank must prepare and send to the Secretary of the Treasury annually, on or before the first of December, his certification determining said amount, if any, which is required to replenish each of said reserve funds to the level required for the payment of the servicing of the debt, and the amount or amounts so certified, if any, shall be set aside and paid to the Bank from whatever funds are available and unencumbered in the Commonwealth Treasury in the Commonwealth of Puerto Rico’s current fiscal year and if there were no such funds available, the Secretary of the Treasury shall request the amount thus certified from the Director of the Office of the Management and Budget and he will proceed to include it in the General Expenses Budget of the Government for the next fiscal year. The President’s certificate will be based on an evaluation made by him of the investment of any of the fund’s monies, which shall be conclusive.
For the purposes of this chapter the term “bonds” shall mean bonds, temporary bonds, refinancing bonds, debentures, promissory notes, interim receipts of indebtedness or any other evidence of indebtedness, issued under the provisions of this chapter.
History —July 24, 1985, No. 22, p. 735, § 8; June 29, 1996, No. 61, § 2.