By Leslie Gevirtz
NEW YORK (Thomson Reuters Foundation) - The U.S. Treasury, at the behest of the U.S. State Department and the United States Agency for International Development (USAID), guaranteed $1.5 billion worth of bonds issued by Jordan earlier this week.
The purpose of the bonds, according to the U.S. government agencies, was to "provide critical services to its citizens as it hosts nearly 630,000 Syrian refugees."
But no one at State, Treasury or USAID would say exactly how the $1.5 billion would be used or what specific projects it would fund, either for the refugees or the Jordanians.
The guarantee means that if Jordan defaults on the bonds, U.S. taxpayers would have to repay both the principal and interest.
It also means that Jordan, which is rated B1 by Moody's Investor Service, was able to issue the bonds at rates ranging from 2.578 percent to 3 percent. According to IFR, a Thomson Reuters company, other countries with a similar rating must pay their investors more than 6.6 percent.
Having the Treasury dispense aid through loan guarantees for other countries is relatively rare. The department has done so twice before for Jordan, and with Tuesday's issue is guaranteeing a total of $3.75 billion for the Hashemite Kingdom.
The United States has issued such guarantees for Tunisia in the past and is expected to do so for Ukraine. Both countries are considered by Moody's as below investment grade.
No country has defaulted on U.S. sovereign loan guarantees, the Treasury Department said.
According to a State Department official the U.S. is providing more than $1.0 billion this year in bilateral economic, development and security assistance to Jordan.
"In addition to bilateral foreign assistance, we have provided nearly $603 million in humanitarian assistance for the Syria crisis to international and non-government organizations in Jordan since the start of the crisis," the official added.
According to an April USAID fact sheet, the money has been used mostly in the north to build five schools in four years, renovate area hospitals and help build a pipeline, pumping station and wastewater treatment plant to increase the water supply in the area.
Jordan did not provide any information on the specific projects the bond issue is to fund.