Contrastación de las Hipótesis Formuladas

The Commonwealth may provide guarantees for the repayment of certain borrowings of component units to carry out designated projects. At June 30, 2012, the following component unit debts are guaranteed by the Commonwealth (expressed in thousands):

Maximum Outstanding Guarantee Balance

Blended component unit —

Public Buildings Authority $4,721,000 $4,285,324

Discretely presented component units:

Government Development Bank for Puerto Rico 267,000 267,000 Puerto Rico Aqueduct and Sewer Authority 1,103,3101,103,310

Port of the Americas Authority 219,349250,000

Total $6,341,310 $5,874,983

The Commonwealth has guaranteed the payments of rentals of its departments, agencies, and component units to PBA, a blended component unit, under various lease agreements executed pursuant to the law that created PBA. Such rental payments include the amounts required by PBA for the payment of principal and interest on the guaranteed debt as authorized by law. The rental commitment to cover principal and interest on the guaranteed debt (excluding premiums and deferred refunding losses) as of June 30, 2012 and for the next five years and thereafter follows (expressed in thousands):

Year Ending

June 30 Principal Interest Total

2013 $ 78,580 $ 198,571 $ 277,151 2014 72,595 198,478 271,073 2015 76,760 194,490 271,250 2016 82,000 190,244 272,244 2017 86,125 185,685 271,810 2018–2022 401,725 988,789 1,390,514 2023–2027 511,800 899,791 1,411,591 2028–2032 1,031,5881,422,034 2,453,622 2033–2037 725,715 344,365 1,070,080 2038–2042 914,740 1,064,423149,683 4,372,074 4,381,684$ $8,753,758

Plus accreted value on bonds outstanding 19,938 Plus unamortized premium, net 27,236 Less deferred loss on bonds defeased (133,924)

Act 131 of July 2, 2012 increased the Commonwealth’s guarantee on PBA’s bonds from $4,325 million to $4,721 million.

Government Development Bank for Puerto Rico Remarketed Refunding Bonds — The Commonwealth guarantees the Remarketed Refunding Bonds, Series 1985, issued by GDB, a discretely presented component unit. The outstanding balance of these bonds amounted to

$267 million at June 30, 2012. On August 1, 2008, GDB repurchased the $267 million outstanding of its adjustable refunding bonds as a result of significant increases in the interest rate of these auction rate bonds. On December 30, 2009, GDB remarketed and reissued these bonds at a fixed rate of 4.75%, maturing on December 1, 2015. These notes are subject to redemption at the option of GDB on or after June 1, 2013 at a redemption price of 101% through May 31, 2014 and 100% after June 1, 2014.

Puerto Rico Aqueduct and Sewer Authority (PRASA) — Act No. 45 of July 28, 1994 states that the Commonwealth guarantees the payment of principal and interest of all outstanding bonds at the date the law was enacted and of all future bond issues to refinance those outstanding bonds of PRASA. Act No. 140 of August 3, 2000 amended Act No. 45 to extend the Commonwealth

guarantee to include the principal and interest payments of the Rural Development Serial Bonds and the loans under the State Revolving Fund Program (SRFP) outstanding at the effective date of Act No. 140, and of all future bonds and SRFP loans that may be issued through June 30, 2005. Act No. 386 of September 21, 2004 extended the Commonwealth guarantee to June 30, 2010. Act. No. 75 of July 12, 2010 amended section 1 of Act No. 45 of July 28, 1994 to extend the

Commonwealth guarantee over the Rural Development and SRFP’s borrowings to June 30, 2015. United States Department of Agriculture (USDA) Rural Development Program assist PRASA in the financing and construction of aqueduct and sewer facilities in rural areas by purchasing revenue bonds from PRASA, the proceeds of which are used by PRASA to finance such projects. GDB provides interim financing for these projects through short-term lines of credit. On September 14, 2011, PRASA issued approximately $70.2 million of Series HH of USDA Rural Development Program Bonds, at a maximum interest of 4.25%, payable semiannually and maturing in semiannual installments through July 1, 2051. The funds raised by this issuance were used to partially repay the outstanding balance of USDA Rural Development Program lines of credit for construction projects from GDB. As of June 30, 2012, the USDA Rural Development Program Bonds consisted of twenty-five (25) separate series, issued from 1983 through 2011, bearing interest from 4.25% to 5% due in semiannual installments through 2051. The outstanding balance of the USDA Rural

Development Program Serial Bonds as of June 30, 2012 was approximately $368.5 million. The USDA Rural Development Program Serial Bonds are guaranteed by the Commonwealth pursuant to Act No. 140 of August 3, 2000, as amended, and PRASA’s net revenue is pledged toward the payment of debt service on the USDA Rural Development Program Bonds.

The Puerto Rico Water Pollution Control Revolving Fund and Puerto Rico Safe Drinking Water Treatment Revolving Loan Fund (the Revolving Funds) were created by Act No. 44 of June 21, 1988 and Act No. 32 of July 7, 1997, respectively, of the Commonwealth. The Puerto Rico Water Pollution Control Revolving Fund is administered, pursuant to Act No. 44 and Act No. 9 of June 21, 1988 and June 18, 1970, respectively, as amended, by Puerto Rico Environmental Quality Board (EQB). The Puerto Rico Safe Drinking Water Treatment Revolving Loan Fund is administered, pursuant to Act No. 5 of July 21, 1977, as amended, by Puerto Rico Department of Health (DOH). Pursuant to these laws, EQB and DOH, on behalf of the Commonwealth, are authorized to enter into operating agreements and capitalization grant agreements with the U.S. Environmental Protection agency (EPA). Puerto Rico Infrastructure Financing Authority (PRIFA), a component unit of the

Commonwealth, PRASA, and GDB entered into a memorandum of understanding under which each party has agreed to assume specific responsibilities in connection with the operations of the

Revolving Funds.

PRASA has entered into revolving loan agreements to finance certain capital improvements. As of June 30, 2012, PRASA had outstanding approximately $450 million under these loan agreements. The loan agreements are evidenced by promissory notes, which bear interest at a 2% annual rate payable semiannually. Construction loans are required to be paid in full within 20 years of the project completion date. PRASA has pledged its net revenues on a basis subordinate in all respect to the PRASA’s bonds outstanding. If PRASA’s pledged revenues are not sufficient for the payment of principal and interest, the payments are guaranteed by the Commonwealth under the Act No. 45 of July 28, 1994, as amended, which obligates the Commonwealth to pay principal and interest on the notes.

On March 18, 2008, PRASA issued approximately $284.8 million of Revenue Refunding Bonds, Series A and B (the “2008 Revenue Refunding Bonds”), (guaranteed by the Commonwealth) to refund PRASA’s outstanding Revenue Refunding Bonds, Series 1995 (guaranteed by the Commonwealth) in the amount of approximately $262.8 million. The 2008 Revenue Refunding Bonds bear interest at rates from 5.80% to 6.10% per annum with maturity dates ranging from July 1, 2021 to July 1, 2034. The outstanding balance of the 2008 Revenue Refunding Bonds at June 30, 2012 amounted $284.8 million.

At various times during fiscal years ended 2005 and 2006, the Port of the Americas Authority, a component unit of the Commonwealth, entered into bond purchase agreements with GDB, whereby GDB agreed to disburse to the Port of the Americas Authority from time to time certain bond principal advances up to a maximum aggregate principal amount of $70 million (Port of the Americas Authority 2005 Series A Bond), $40 million (Port of the Americas Authority 2005 Series B Bond), and $140 million (Port of the Americas Authority 2005 Series C Bond). The proceeds of the bonds were used to finance the cost of development and construction of the Port of the Americas. The aggregate unpaid principal balance of all outstanding bond principal advances shall be payable in full on January 1, 2015 and January 15, 2015. The principal amount may be paid with any of the following: (i) a long-term bond issuance once the projects are completed; (ii) other revenue of the Port of the Americas Authority; (iii) or legislative appropriations as established in Act No. 409 of September 22, 2004 (Act No. 409). Principal and interests payments are guaranteed by the Commonwealth by Act No. 409. As of June 30, 2012, the principal outstanding under those bond purchase agreements amounted to $219.3 million.

(b) Debt Supported by Appropriations and Sales and Use Taxes

At June 30, 2012, the outstanding principal balances of debt payable by Commonwealth

appropriations and sales and use taxes (PFC bonds and notes payable, as described in Note 15(d), and notes payable to GDB, as described in Note 11) which are included in the individual financial statements of the following discretely presented component units, are as follows (expressed in thousands):

PFC Bonds and Notes Payable to

Notes GDB and Others Total

Puerto Rico Acqueduct and Sewer Authority $411,229 $ - $ 411,229

Special Communities Perpetual Trust - 363,639 363,639

Puerto Rico Medical Service Administration - 264,390 264,390

Puerto Rico Health Insurance Administration - 171,080 171,080

Puerto Rico Convention Center District Authority - 145,889 145,889

Solid Waste Authority 7,778 74,416 82,194

University of Puerto Rico - 64,999 64,999

Land Authority of Puerto Rico 55,819 - 55,819

Puerto Rico Tourism Company 44,484 - 44,484

Puerto Rico Industrial Development Company - 42,170 42,170

Puerto Rico Infrastructure Financing Authority 3,607 32,202 35,809

Company for the Integral Development of the

“Península de Cantera” - 23,103 23,103

University of Puerto Rico Comprehensive Cancer Center - 19,866 19,866

National Parks Company of Puerto Rico - 5,894 5,894

Puerto Rico Electric Power Authority - 5,651 5,651

Government Development Bank 3,501 - 3,501

Institute of Puerto Rican Culture - 2,5152,515

Total $526,418 $ 1,742,2321,215,814 $

Notes payable to GDB are reported in the statement of net assets (deficit) as “Due from (to) component units”.

(c) Other Guarantees

Mortgage Loan Insurance — The Puerto Rico Housing Finance Authority (the “Authority”), a component unit of GDB, provides mortgage credit insurance to low and moderate income families through its mortgage loan insurance program. The Commonwealth guarantees up to $75 million of the principal insured by the mortgage loan insurance program. As of June 30, 2012, the mortgage loan insurance program covered loans aggregating to approximately $482 million. Currently, the Commonwealth has not been called to make any direct payments pursuant to these guarantees.