P.R. Laws tit. 13, § 83
(a) The Executive Director is authorized to negotiate and execute, with any bank, investment bank, securities issuing bank or any other financial institution provided it has (directly or through securities) a high credit rating (of not less than investment grade), one (1) or more qualified interest rate exchange agreements of the Authority that the Executive Director determines to be in the best interests of the Authority in relation to any obligation of the Authority or, otherwise, in relation to the management of the risks or costs of the Authority related to interest rate fluctuations, investments, changes in price levels or credit risks of any obligation, or in relation to obtaining economic benefits equal to a reduction in the interest rates or in the service of the debt of the outstanding bonds so as to generate a profit for the Authority of at least sixty million dollars ($60,000,000), under the terms and conditions the Executive Director may determine to be for the best interests of the Authority.
(b) The Executive Director may, from time to time, execute, modify, amend, sell or terminate one (1) or more qualified interest rate exchange agreements of the Authority as the Executive Director may determine to be necessary or desirable in relation to issuing, incurring, sustaining, refinancing or securing obligations. This authorization also includes the power to execute modifications to, or revoke any qualified interest rate exchange agreement of the Authority previously executed by the Executive Director and the power to execute a qualified interest rate exchange agreement of the Authority that modifies the means of computing the payment of the interest rate under any qualified interest rate exchange agreement of the Authority previously executed or another means of computing the interest rate or that revokes, in total or in part, the effects of a previous qualified interest rate exchange agreement of the Authority as to the risk or cost of the interest rates of the Authority. A qualified interest rate exchange agreement of the Authority executed by the Executive Director may contain any clause, including clauses in relation to the payments, terms, payments for cancellation, security, noncompliance and remedies, and may be executed with any other part as described in subsection (a) of this section that the Executive Director may determine to be necessary or desirable.
(c) The Executive Director shall not execute a qualified interest rate exchange agreement of the Authority for any reason other than the main purpose of handling the risks, investments, changes in price levels or credit risks of any obligation or obtain economic benefits equal to reductions in the interest rates or in the service of the debt in relation to outstanding bonds. A qualified interest rate exchange agreement of the Authority may provide that the payments of the Authority under said agreement be based on a method for the computation of a fixed or variable interest rate. The Executive Director shall not assume the functions of a broker or any other similar role in relation to qualified interest rate exchange agreements of the Authority, nor enter into said agreements for the purpose of financial speculation. A qualified interest rate exchange agreement of the Authority may be executed in relation to specific obligations of the Authority which may consist of multiple series or issues of obligations as specified by the Executive Director. The qualified interest rate exchange agreement of the Authority may be executed previously, concurrently or after the issue of or the date in which the obligations of the Authority are incurred to which said agreement is related. Each qualified interest rate exchange agreement of the Authority may be executed for a nominal amount for up to, but not exceeding, the amount of the principal (or its equivalent) of the obligations with which said qualified interest rate exchange agreement of the Authority is related. The term of a qualified interest rate exchange agreement of the Authority may be as long as or less than the term of the obligations with which said qualified interest rate exchange agreement of the Authority is related.
(d) In relation to the execution of a qualified interest rate exchange agreement of the Authority, the Executive Director may execute credit quality improvement agreements or credit guarantees strengthening agreements to guarantee the obligations of the Authority under said qualified interest rate exchange agreement of the Authority with any payment, guarantee, noncompliance, remedy and other terms and conditions the Executive Director may determine, including the execution of agreements under which the latter is committed to deliver collateral, be it at the time of executing the qualified interest rate exchange agreement or in the future under the conditions stipulated in the qualified interest rate exchange agreement of the Authority.
All actions of the Executive Director taken under the provisions of this chapter may only be conducted after consulting with the Government Development Bank for Puerto Rico. Said actions must be consistent with the Interest Rate Risk Management Policy Statement adopted by the Government Development Bank for Puerto Rico and, that in the judgment of the Executive Director shall best serve the interests of the Authority.
History —Aug. 1, 2005, No. 39, art. 4, § 1.