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#Puerto Rico to boost cash flow after key bill signed into law

SAN JUAN, Puerto Rico, July 3 A key bill that will boost Puerto Rico's cash flow was signed into law Friday, the governor's office said, allowing the commonwealth to raise $400 million in Tax & Revenue Anticipation Notes (TRANs) from three public insurance corporations.

Puerto Rico's governor dropped a bombshell on creditors earlier this week by saying the island needed to restructure debts to solve its fiscal problems.

"This measure is necessary due to the absence of the commonwealth's usual liquidity sources, and will help keep Treasury's cash flow, which is needed for the government operations," the government statement said of the TRANS notes.

The TRANs measure also calls for suspending monthly payments set aside for general obligation debt, although the government warned this action does not imply the commonwealth will not meet due payments with its bondholders in a timely manner.

Government officials have said Puerto Rico needs about $1.2 billion in cash to operate during the first months of fiscal 2016, which began July 1.

Government Development Bank President Melba Acosta said Tuesday that besides the $400 million in TRANs from the public corporations, the commonwealth was also discussing with private banks a short-term financing transaction of about $400 million.

Acosta said "this could take more time, we are in negotiations." She added that an arrangement was reached with the public retirement systems that would allow the government to receive some funds at the beginning of the year rather than later on, as is typical. (Reporting by contributor in San Juan; Editing by Bernard Orr )