ST. CROIX — A financial advisor told board members of the Matching Fund Special Purpose Securitization Corporation during their quarterly meeting today that his firm’s investment strategy has resulted in more than $600,000 in extra earnings for the Virgin Islands government.
Additionally, the board members unanimously approved two motions to reimburse the Virgin Islands Public Finance Authority for $239,625.25 in expenses paid on behalf of the corporation as well as to accept the corporation’s fiscal year 2025 budget in the amount of $700,000.
Andrew Mathes, of Causey Demgen and Moore PC, said a previously-circulated report relative to the capitalized interest fund does not include all the interest earnings on the remaining holdings.
“We're essentially in the wind-down period for this fund because the final payment from the capitalized interest account is going to be on October 1, 2024, and we've got securities that are going to mature worth $5.1 million more than the final requirement,” he said. “But we also have interest from those securities that’s not included, which brings us over $5.7 million.”
Mathes said the net earnings from the investment strategy his firm implemented are going to be more favorable for the Virgin Islands. He attributed the earnings to the fact that the Federal Reserve System has not lowered interest rates, and the investments were in short securities that were at the peak of the yield curve.
“It's always nice when I can tell you you're going to get a little over $600,000 more than what we anticipated,” he said.
Once the final debt service payment is made on the bonds on October 1, Mathes said the extra earnings will be available to the Virgin Islands. As a result, he said the VI government will not have to budget as much for debt service for the next payment.
Governor Albert Bryan Jr., MFSPSC chair, acknowledged the favorable report.
“It’s good to know we have a little change in the bank,” he said.
Bryan chaired the corporation’s meeting virtually via Zoom. The other board members who participated were Michelle Dreyer, secretary; Sheila Robinson, treasurer; Kristine Eppes, and Pamela Gregorski.
The Matching Fund Special Purpose Securitization Corporation, a special type of corporate entity separate from the government, was approved by the Legislature to issue bonds on rum tax revenues that permitted refinancing on more favorable terms at current interest rates.
The annual payments that are due on October 1 are tied to the legislation, known as the Public Finance Authority bond restructuring bill. It was enacted in 2022 to reduce a portion of the government’s debt and bring solvency to the Government Employees’ Retirement System. The pension system receives between $82 million to $158 million in annual contributions, totaling about $4 billion over 30 years.
During the meeting, the board unanimously approved two motions relating to finances.
The board approved a motion to reimburse the PFA a total of $239,625.25 to cover expenses the PFA has paid on behalf of the corporation for accounting and investment services, legal services, payments to the trustee, payment of costs for the board’s expenses, and accounting and auditing services.
The board approved a motion to accept the corporation’s fiscal year 2025 budget of $700,000, which represents a $60,000 decrease from its FY 2024 budget.
