Puerto Rico's voters on Sunday defeated a nonbinding measure that would have opposed a yes-or-no vote on whether the commonwealth should become America's 51st state.
The resolution was advanced by the island's pro-commonwealth governor, Rafael Hernandez-Colon, and included several provisions. One proclaimed citizens' right in a statehood referendum "to vote for three alternatives" -- statehood, continued commonwealth status, and independence.
"It really was acknowledged by all of the parties that it was not a status-related vote, but a vote on the wisdom of amending the constitution to include certain provisions regarding status," said Jose Berrocal, the president of the Government Development Bank for Puerto Rico.
Plans for a full referendum this year were scuttled after the U.S. Congress failed to sign off on the balloting. Now it could be late 1995 before the status question comes to a binding vote.
The commonwealth's debt was unaffected yesterday but the weekend's political development, according to John O'Reilly, a Puerto Rico bond trader at the New York firm of Titus & Donnelly. Bids for the Puerto Rico Electric Power Authority's 7% bonds of 2021 were 99 7/8, "virtually unchanged" from Friday, Mr. O'Reilly said.
Opinion on the status issue is close enough so that the pro-commonwealth governor has cause for concern.
In a poll taken Feb. 20, 41% of Puerto Ricans favored continuing the island's status as a commonwealth of the U.S. Thirty-nine percent favored statehood, and only 5% supported severing U.S. ties altogether.
Statehood poses countervailing questions for Puerto Rican bonds, which are popular because current tax law exempts them from federal, state, and local taxes nationwide. The commonwealth has borrowed $1.1 billion with 10 offerings in 1991, according to Securities Data Co./Bond Buyer.
Statehood would end the triple exemption of Puerto Rico bonds, and it would also close tax breaks for mainland corporations that set up operations on the island.
Even though statehood would result in increased federal aid, the net effect on the island would be negative, a bearish factor for the commonwealth's nearly $13 billion in debt. But the prospect of no more triple-tax free bonds being issued could be bullish for those already in the market.