(Adds background on tax, bond deal)
NEW YORK/SAN JUAN, Puerto Rico, Nov 24 (Reuters) - Puerto Rico’s planned bond deal of up to $2.9 billion will not happen before early 2015, two finance industry sources briefed on the matter said on Monday.
The delay comes as Puerto Rico Governor Alejandro Garcia Padilla has so far been unable to muster the support of his own party for a tax hike needed to back the bond deal.
Barclays has been selected as lead underwriter for the deal with Morgan Stanley and Royal Bank of Canada selected as co-managers, the sources said.
The banks did not immediately return requests for comment.
Puerto Rico needs the deal to boost its liquidity and keep it out of capital markets for up to two years. Ratings agency Moody’s Investors Service has said the island’s government could run into financial difficulties as early as next year if it is unable to complete the transaction.
Officials at Puerto Rico’s Government Development Bank (GDB), the U.S. commonwealth’s financing arm, had previously said they wanted to complete the deal this year, possibly as early as November.
A spokesman for the GDB did not immediately return a request for comment.
Puerto Rico needs to increase a tax on crude oil by $6.25 to $15.50 per barrel in order to raise $178 million a year to back the bonds. The tax hike was meant to be passed last week, but some members of Padilla’s Popular Democratic Party (PDP) did not support the move. (Reporting by Reuters in San Juan and Edward Krudy in New York; editing by G Crosse and Bernadette Baum)