Sean Nero

The T&T Stock Ex­change (TTSE) is go­ing af­ter this coun­try's (US)$1 bil­lion bond mar­ket. Wain­wright Iton, chief ex­ec­u­tive of­fi­cer of the TTSE, made it clear at the launch of the com­pa­ny's new US$ eq­ui­ty trad­ing plat­form last Fri­day held at the stock ex­change's Nicholas Tow­er head­quar­ters, Port-of-Spain. He said the com­pa­ny planned to win over bro­kers to list the nu­mer­ous US-dol­lar de­nom­i­nat­ed bonds on its new­ly es­tab­lished US eq­ui­ty se­cu­ri­ties mar­kets. In the last 15 months, he said, the TTSE had been on a de­vel­op­men­tal dri­ve recog­nis­ing that an op­por­tu­ni­ty ex­ists to al­low lo­cal in­vestors and, by ex­ten­sion, re­gion­al share­hold­ers to trade in US$ se­cu­ri­ties that ex­ist lo­cal­ly.

"There are about 40-odd US-dol­lar de­nom­i­nat­ed bonds that are out­stand­ing, with a face val­ue in ex­cess of about $1.6 bil­lion. This is the pool of se­cu­ri­ties we would ex­pect to get list­ings from in this mar­ket, as well as all fu­ture of­fer­ings that may come fol­low­ing Sagi­cor's lead." Sagi­cor Fi­nan­cial Cor­po­ra­tion (SFC) was the first com­pa­ny to trade a US-dol­lar de­nom­i­nat­ed in­stru­ment on the TTSE. The com­pa­ny made 120 mil­lion con­vert­ible re­deemable pref­er­ence shares avail­able to ex­ist­ing and po­ten­tial share­hold­ers.

Priced at US$1 each, the shares were be­ing of­fered for five years from the pur­chase date with an at­trac­tive 6.8 per cent re­turn on in­vest­ment. "It may take us some time to see a ro­bust mar­ket de­vel­op, but we think that it's op­por­tune to give ex­ist­ing bond­hold­ers and share­hold­ers the op­por­tu­ni­ty, if they so de­sire, to trade their ini­tial in­vest­ments, hence the rea­son for the cre­ation of this par­tic­u­lar fa­cil­i­ty."

He praised the work of his col­leagues in the cre­ation of the new US$ eq­ui­ty plat­form and un­der­scored the ef­fort it took to de­liv­er it in such a short time, con­sid­er­ing that the ma­jor com­pli­ca­tion was set­tling these trans­ac­tions in US dol­lars which were not le­gal ten­der in T&T.

Reg­is­tered se­cu­ri­ties on­ly:

On­ly se­cu­ri­ties reg­is­tered with the T&T Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) would be al­lowed to trade on the TTSE US eq­ui­ty mar­ket, said Iton. "We would not want any­body to be con­fused in­to think­ing that we are go­ing to trade Mi­crosoft or Bank of Amer­i­ca shares. We are trad­ing se­cu­ri­ties is­sued in Trinidad and in the re­gion that are reg­is­tered by the lo­cal SEC. Those are the se­cu­ri­ties that are the sub­ject of list­ing on this ex­change and the sub­ject of trad­ing on this fa­cil­i­ty."

No for­eign re­serve back­lash:

Cit­ing the dif­fi­cul­ty had by busi­ness­man with­in re­cent months to se­cure US dol­lar cur­ren­cy from banks for which to pay for goods and ser­vices, Iton does not be­lieve the in­tro­duc­tion of the TTSE US$ eq­ui­ty would lead to he­m­or­rhag­ing of this coun­try's re­serves. "We don't ex­pect that the cre­ation of this fa­cil­i­ty is go­ing to be a drain on the for­eign ex­change re­serves of this na­tion. The shares have al­ready been is­sued. The share­hold­ers have al­ready sub­scribed for these shares de­nom­i­nat­ed in US dol­lars. If there is go­ing to be any leak­age at all in terms of for­eign ex­change, that's when it hap­pens. "What we are pro­vid­ing at the mo­ment is a plat­form for sec­ondary trad­ing, where ex­ist­ing peo­ple, some of the peo­ple who have sub­scribed for Sagi­cor pref­er­ence shares-there were about 500 Trinida­di­an share­hold­ers-if they so de­sire, to liq­ui­date their in­vest­ment in these pref­er­ence shares and some­body else would buy it. The US-dol­lar plat­form that we have pro­vid­ed is pret­ty much go­ing to op­er­ate like our TT-dol­lar plat­form.

We are us­ing the same tech­nol­o­gy and we are us­ing the same trad­ing al­ga-rhythm."

Iton said there were two re­stric­tions when trad­ing in US on the TTSE. Sub­scribers must pre-fund their ac­counts and the bro­ker must com­plete the trans­ac­tion in three days. Us­ing the T-plus three cy­cle, he said, pur­chasers would not have the lux­u­ry to or­der, then go to their re­spec­tive bank(s) to pro­cure US dol­lars to set­tle the ac­count. "If that were the case, we would be set­ting up our­selves for set­tle­ment fail­ures. We have to set­tle in three days. It's a mar­ket de­signed es­sen­tial­ly for peo­ple who al­ready have US dol­lars and want to trade. The re­stric­tion is a re­stric­tion that we have placed on our bro­kers that we can have set­tle­ment. It's not a le­gal re­stric­tion. It's an op­er­a­tional pro­ce­dure."

Mar­ket op­por­tu­ni­ties:

"We are spread­ing the Sagi­cor foot­print in terms of the area of the re­gion in which we do busi­ness, quite apart from our in­ter­na­tion­al op­er­a­tions," said Richard Kell­man, chief op­er­at­ing of­fi­cer at Sagi­cor Fi­nan­cial Cor­po­ra­tion. "We are very dom­i­nant in Ja­maica, in Bar­ba­dos and in the East­ern Caribbean. In T&T, which, as you know, is the lead­ing econ­o­my in the re­gion, our pres­ence isn't as strong. We have been here for a very long time, and we have cap­tured, been very ac­tive and dom­i­nat­ed a par­tic­u­lar seg­ment of the mar­ket, but there is a lot of room for us to be able to grow and ex­pand. "We are look­ing to grow and ex­pand in this mar­ket and, if any op­por­tu­ni­ties arise which would give us a chance to be able to grow more ag­gres­sive­ly, then I think we'll be very well po­si­tioned to take ad­van­tage of those op­por­tu­ni­ties. We are al­so on the look out for any op­por­tunis­tic chances that may ap­pear through­out the re­gion that would give us the op­por­tu­ni­ty to grow our busi­ness."

Kell­man said the in­stru­ment on of­fer al­lowed the share­hold­er the op­tion to con­vert pref­er­ence shares in­to Sagi­cor or­di­nary shares at a fixed ex­change rate at any­time dur­ing the five-year pe­ri­od. If that op­tion is not ex­er­cised, then at the end of the five-year pe­ri­od, the cap­i­tal amount will be re­paid in full. The fund­ing to be de­rived through the avail­abil­i­ty of Sagi­cor pref­er­ence shares on the mar­ket, said Kell­man, was very time­ly. He said it came at a time when cap­i­tal re­quire­ments for in­sur­ance in­dus­try are in­creas­ing and the com­pa­ny would be very well po­si­tioned to com­fort­ably meet those re­quire­ments.

"It al­so comes at a time when there has been a lot of dis­lo­ca­tion in the in­sur­ance in­dus­try through­out the re­gion, orig­i­nat­ing in Trinidad, large­ly. I think we will be al­so well po­si­tioned to play a role in sta­bil­is­ing the in­dus­try, if and when those op­por­tu­ni­ties emerge."

WISE: Sagi­cor, a sta­ble in­vest­ment:

Adri­an Man­mo­han, chief ex­ec­u­tive of­fi­cer at West In­dies Stock Ex­change was as­sur­ing in­vestors that ac­quir­ing Sagi­cor pref­er­ence shares was a good buy, cit­ing the com­pa­ny's good cred­it rat­ing. "It's not a de­posit in a bank. It's not like a com­mon eq­ui­ty where you have a lot of fluc­tu­a­tions in prices. This would be paid as a div­i­dend. So it's more for some­body who is look­ing for in­come as op­posed to cap­i­tal ap­pre­ci­a­tion, (when) com­pared to the bank right and oth­er fixed in­come type in­stru­ments. With 6.5 per cent, and es­pe­cial­ly with the good cred­it rat­ing that Sagi­cor has, it's a very at­trac­tive in­vest­ment. Every­thing else in that range is be­low 3.5 to 4 per cent," Man­mo­han said.