The PAB is Guam’s tax-exempt bonding authority creating a lower cost, long-term source of capital under the Federal Tax Act of 1986.
The Private Activity Bonds available on Guam are as follows:
Qualified Mortgage Bonds
Mortgage Credit Certificate
Qualified Residential Rental Projects
Qualified Enterprise Zone Facility Bonds
Exempt Facility Bonds
Private Activity Bonds (PABs) are issued by GEDA on behalf of private entities on a tax-exempt basis to stir economic development.
PABs DO NOT include any governmental guarantee or grant. The bonds are payable strictly from moneys provided by the company for which the bonds are issued, and backed by collateral that is put up by the company.
If all of the other requirements can be met, interest on some kinds of Private Activity Bonds is exempt from federal income taxes.
A PAB is not like a traditional municipal bond, which is payable from governmental revenues like property taxes, sales taxes or utility revenues. Generally, PABs are unsuitable for investment by individuals, and are sold strictly to bank and other institutional investors.