GDB passes Barclays the hot potato of who bought the 2014 GOs

On September 1, 2015, CPI reported that the Government Development Bank (GDB) tried to pass to Barclays — bookrunner and lead underwriter of the March 2014 GO issue — the duty to disclose who bought that debt, in dismissal motions against CPI’s information-access lawsuit.

Since March (and in court since July) CPI has sought the companies that bought the issue billed as the largest and costliest municipal “junk bond” deal in history, and their profiles in other crises. In an August 11 motion, Giselle López Soler (GDB) argued it is not a public document and is not in the Bank’s hands but with third parties: “GDB has no ministerial duty to produce it.”

Barclays (Mark Hazelton) said it “generally does not provide this information” and pointed to EMMA/MSRB; Jennifer Galloway (MSRB) confirmed federal law does not require disclosing holder identity. Melba Acosta, GDB president, told CPI the Bank lacks the list because the debt is resold; she later admitted she “could ask” Barclays. Carla Minet: the government promised transparency in the negotiation and refuses to say to whom it sold.

As an exhibit, GDB published the Purchase Agreement: purchase price $3,226,868,538.33 on principal of $3.5 billion, with a $245 million discount and another ~$28.1 million to underwriters (Barclays, Morgan Stanley, RBC, BofA Merrill, Goldman, J.P. Morgan, among others). An access suit ≠ a judgment on the debt’s illegality.