Francisco de Armas remembers Puerto Rico’s municipal finance landscape long before the Island’s fiscal crisis reshaped it due to the central government’s bankruptcy. That world collapsed in 2016, leaving municipalities without their traditional lender and eventually without the Equalization Fund that once distributed nearly $360 million a year, and without the cen-tral coordination that allowed municipalities to borrow for longterm infrastructure. Today, de Armas is attempting to rebuild that system from the private sector. As managing partner & co-founder of PRMF Fund LLC, he is preparing the fund’s first major investment: a portion of the Municipality of San Juan’s $122.2 million general obligation (GO) bond issuance, which includes $112.6 million in taxexempt bonds and $9.6 million in taxable bonds. The issuance priced the week of August 3 and is slated to settle the week of August 17, according to the municipality’s investor pre-sentation dated July 22, 2026.
“This is the first transaction of the fund,” de Armas said. “We launched it, and now we are talking to potential in-vestors,” he said. The San Juan deal is not only PRMF’s debut—it is the foundation of a new municipal capital model built on private investment, Act 60 tax incentives, and a repayment mechanism that has never defaulted.
A Major Refinancing Sets the Stage
San Juan enters this new issuance after completing a major restructuring of its outstanding obligations. On June 29, 2026, the municipality refinanced $232.7 million in general obligation bonds, notes and other debt instruments using commercial loans bearing interest at 6.35%. The refinancing consolidated multiple obligations into a sevenyear structure with amortization based on 15 and 20-year schedules, resulting in a balloon maturity of approximately $154 million due July 1, 2033.
The investor presentation notes that this commercial debt is also a general obligation of San Juan, secured by the city’s unlimit-ed taxing power and backed by the same Special Additional Tax (CAE in Spanish) revenues that support the new 2026 bonds. The refinancing cleared the path for the newmoney issuance by stabilizing nearterm obligations and aligning San Juan’s debt profile with its longterm capital plan.
Aside from the new bonds, the Banco Popular credit facility, and a small amount of GO debt held as collateral for Puerto Rico Municipal Finance Agency bonds, San Juan has no other outstanding general obligation instruments.
For PRMF, the refinancing was a critical precursor. It clarified the municipality’s debt position, strengthened its liquidity profile, and created a clean runway for the $122.2 million issuance the fund plans to enter.
San Juan’s Bond Issue: A New Chapter for the Capital City
San Juan’s 2026 GO bonds finance a slate of capital projects that reflect the city’s broad responsibilities and its role as Puerto Rico’s economic hub. Proceeds will fund improvements to the municipal hospital, the United School of San Juan, an animal protection and adoption center, a facility serving homeless and atrisk populations, and upgrades to streets and parks. The bonds are secured by San Juan’s unlimited ad valorem taxing power, backed by both the Basic Tax and the CAE, and carry investmentgrade ratings of Baa3 from Moody’s and BBB+ from Fitch.
The city’s financial profile is unusually strong for Puerto Rico. San Juan is the Is-and’s largest municipality by population, its economic engine, and home to diver-sified employment across finance, trade, tourism, education and government. Me-dian household income is $27,992 a year, consistently above the Commonwealth average, and unemployment stood at 3.5% in 2025, below both Puerto Rico and U.S. benchmarks.
The municipality’s financial manage-ment team, led by Deputy Mayor Israel Alicea Luciano and senior budget and finance officials with decades of experience, has overseen a dramatic improvement in liquidity. As of June 30, 2025, San Juan held $440.8 million in unrestricted cash and $227.8 million in restricted cash, while its General Fund balance increased by $520 million over five years.
San Juan Mayor Miguel Romero is also heading a capital program that is equally ambitious. San Juan has 284 active permanent improvement projects totaling $703.6 million, with nearly onefifth of costs expected to be paid with bond proceeds. In addition, federal FEMA and CDBG (Community Development Block Grant) funds are supporting $443.8 million in microgrid projects with a combined capacity of 62.6 megawatt (MW), capable of powering more than 63,000 homes. These projects, sched-uled for completion in 2032, are designed to strengthen energy resilience at major medical and educational institutions.
Against this backdrop, PRMF’s investment is arriving at a moment when San Juan is reasserting its fiscal strength and longterm planning capacity.
Why PRMF Chose San Juan
For PRMF, San Juan’s issuance is both strategic and symbolic. The municipality’s refinancing clarified its debt structure and created a clean separation between legacy obligations and new capital needs. The remaining $122.2 million in newmoney bonds will be purchased by PRMF and other accredited investors through RBC Capital Mar-kets, the sole manager of the offering.
“We expect to buy a portion of the bonds,” de Armas said.
San Juan’s investmentgrade ratings and strong liquidity profile make the bonds at-tractive, but PRMF’s interest is rooted in something deeper: the CAE, the statutory revenue mechanism that backs municipal GO debt.
The CAE: A Repayment Mechanism That Never Defaulted
The Additional Special Tax (CAE) is the backbone of Puerto Rico’s municipal finance system. It is an unlimited ad valorem tax levied on real and personal property, collected by CRIM (Municipal Revenues Collection Center), and deposited directly into San Juan’s Redemption Fund at Banco Popular. The CAE is legally pledged to GO debt service and must be levied at whatev-er rate is necessary to meet obligations.
San Juan’s CAE rate of 3.5% generated $101.6 million in 2025, significantly above annual debt service requirements. Historical balances show consistent strength: the Redemption Fund held $101.9 million as of May 31, 2025, and the municipality released $51.2 million in excess CAE that year for capital expenditures and liquidity reserves, according to its bond documents.
De Armas emphasized the CAE’s flawless payment history. “The loans that had as a source of repayment the special additional contribution… they never stopped paying. They never had a technical default, nor a monetary default. Never, since its origin.”
Even after Hurricane Maria, the earthquakes of 2019–2020, the COVID19 pandemic, and Puerto Rico’s bankruptcy—the largest municipal restructuring in U.S. history—CAEbacked obligations continued paying on schedule.
The investor presentation confirms that CRIM has never had to apply the Basic Tax to cover GO debt service, underscoring the CAE’s reliability.
PRMF Fund LLC operates under a private equity decree granted through Puerto Rico’s Incentives Code (Act 60). This allows the fund to extend substantial tax benefits to eligible investors, including accredited individuals, qualified purchasers and qualified institutional buyers.
“You have the compensation of lowering tax payments and also having a yield on the investment,” de Armas said.
These incentives, combined with the CAE’s stability, create a compelling proposition for sophisticated investors seeking municipal exposure in Puerto Rico.
“ We want to be an alternative. An additional alternative… with terms and conditions different from what a traditional commercial offer is.”
– Francisco de Armas,
Managing partner & cofounder of PRMF Fund LLC
A Model for Other Municipalities
PRMF is already in discussions with other municipalities seeking longterm capital for infrastructure. Each town has distinct needs—roads, water systems, public buildings, energy projects—and PRMF aims to provide financing aligned with the useful life of public assets.
“This creates a route where mayors can see… how we can bring private capital to public works,” de Armas said.
The San Juan transaction has already received approvals from AAFAF (Fiscal Agency and Financial Advisory Authority), the Financial Oversight and Management Board under Section 207 of PROMESA, and the city’s Municipal Legislature. Pricing is scheduled for early August, with closing expected on August 21.
PRMF anticipates raising approximately $100 million over the next 24–36 months for additional municipal transactions. “There is more than enough space to be able… to invest,” de Armas said.
For de Armas, the San Juan transaction is both a beginning and a statement: Puerto Rico’s municipalities can once again access longterm capital, and private in-vestors—local and international—can participate in rebuilding the island’s public infrastructure.
“ We want to be an alternative. An additional alternative… with terms and conditions different from what a traditional commercial offer is.”
– Francisco de Armas,
Managing partner & cofounder of PRMF Fund LLC
