Company to launch new municipal capital fund
PRMF Fund LLC is preparing a significant investment in the Municipality of San Juan’s 2026 General Obligation bond issuance, a move that formally launches the private capital fund created to revive Puerto Rico’s municipal finance market after years of contraction.
The vehicle will acquire a portion of the city’s $122.2 million offering—$112.6 million in U.S. tax‑exempt bonds and $9.6 million in taxable bonds—as the fund begins deploying capital for its first transaction.
“This is the first transaction of the fund,” PRMF co‑founder Francisco de Armas said in an exclusive interview with Caribbean Business. “We launched the fund and are already speaking with investors for this series and future series.”
De Armas said PRMF was designed to fill the void left by the 2018 shutdown of the Government Development Bank, which once served as the central lender for municipalities. The fund expects to raise roughly $100 million over the next 24–36 months to finance additional municipal projects across the island.
San Juan’s issuance includes both refinancing and new‑money components. Local banks—Popular, FirstBank and Oriental—have already refinanced approximately $220 million. The remaining $122.2 million represents new capital, which PRMF and other accredited investors will purchase through RBC Capital Markets, the underwriter.
PRMF plans to buy a “significant portion” of the new-money bonds. “Not entirely the hundred-odd,” de Armas said, “but a significant portion.”
The bonds carry investment‑grade ratings—BBB+ from Fitch and Baa3 from Moody’s—giving San Juan one of the strongest municipal credit profiles in Puerto Rico. The bond issue, according to documents obtained by Caribbean Business, is slated to mature in 2046.
Participating in the transaction are Ankura Consulting Group as municipal advisor and Norton Rose Fulbright as bond counsel. The underwriter’s counsel is Nixon Peabody LLP in New York. Ad Astra Solutions is listed as financial advisor, according to documents.
The money will be used for certain capital projects to be established by ordinance.
The bonds are guaranteed by ad-valorem taxation. De Armas emphasized that the Additional Special Tax (CAE), the statutory property‑tax surcharge that backs municipal GO debt, has never missed a payment. “They never stopped paying. They never had a technical default, nor a monetary default,” he said. “It’s the only loan… that it did not fail to pay, before, during and after the bankruptcy.”
Under Puerto Rico law, municipalities must levy the CAE at whatever rate is necessary to cover debt service, and CRIM deposits collections directly into a segregated redemption fund managed by a trustee.
The Series SJ2026 fund offers an illustrative net U.S. tax‑exempt yield of 4.80% and an illustrative Puerto Rico tax‑equivalent yield of 8.80%, boosted by Act 60’s 60% investment‑based deduction.
“The incentive is threefold,” de Armas said. “You have the 60% deduction, you don’t pay capital gains on the sale of the asset, and Puerto Rico’s government bonds are already exempt by law.”
Eligible investors include accredited individuals, qualified purchasers, and QIBs. PRMF does not accept retail investors or retirement funds.
The San Juan deal is expected to close in the second or third week of August.
