You are here

US$550 million bond ‘left money on the table’

Published: 
Thursday, December 19, 2013

Two well-respected analysts of Caribbean debt issues have suggested that last week's issue by Government of a US$550 million bond on the international capital market was mispriced and that the country could have borrowed at significantly lower interest rates.

 

Minister of Finance Larry Howai led a roadshow to Los Angeles, New York and Boston earlier this month to drum up interest by international institutional investors in a US$500 million, 10-year bond to be issued by Government, in its first foray into the international capital market since 2007.

 

Citibank served as the Government advisors on the bond issue.

 

The US$500 million bond was priced at 4.375 per cent last week Wednesday and received very strong demand from international investors, attracting bids of close to US$5 billion, according to a statement from the Ministry of Finance on Thursday last.

 

The strong demand at 4.375 per cent allowed the Government to increase the offer by US$50 million to US$550 million and “tighten the interest rate by 0.375 per cent from the initial rate of 4.75 per cent.”

 

But even the rate of 4.375 per cent on the US$550 million bond was described by Jason Julien, the general manager at First Citizens Investment Services, as being “very generous” and “a significant premium” when compared to the TT-government, US dollar yield curve.

 

Julien pointed out that Government's previously issued bond, which is due to mature in 2021, was trading at 2.33 per cent on Friday, while a 20-year bond that matures in 2027 traded at 3.96 per cent.

 

 

 

Disclaimer

User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff. Guardian Media Limited accepts no liability and will not be held accountable for user comments.

Please help us keep out site clean from inappropriate comments by using the flag option.

Guardian Media Limited reserves the right to remove, to edit or to censor any comments. Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.

Before posting, please refer to the Community Standards, Terms and conditions and Privacy Policy