Last update: 10-Dec-2013 10:54 am
Tuesday, December 10, 2013
Trinidad & Tobago Guardian Online
You are here
Nipdec’s $1billion bond auction oversubscribed
A $1 billion bond auction to raise money to build roads and carry out other public works has been oversubscribed, the agent for raising and managing the bond issue said yesterday. The Central Bank confirmed in a statement that the auction of the National Insurance Property Development Company Limited’s (Nipdec) $1 billion fixed rate bond has been oversubscribed.
The auction for the 16-year $1 billion 4 per cent fixed rate bond received total bids amounting to more than $1.5 billion, the Central Bank said. The issue date on the bonds was yesterday, October 25. “Due to this overwhelming response, the bond was allotted at a premium, with a clearing price of $102.38 per $100 face value, offering investors a yield to maturity of 3.80 per cent,” the bank said.
The “yield to maturity” is an estimate of what an investor will receive if the investor holds the bond until October 25, 2029, its maturity date. The Central Bank said: “Bids at this price ($102.38) were pro-rated to allocate almost all (99.59 per cent) of the amount applied for, while competitive bids submitted at a price lower than this were rejected.”
Successful competitive bidders, as well as non-competitive bidders, will be required to pay the clearing price ($102.38) for the bond, the Central Bank said. The range of successful bids was from $102.38 to $119.97. The coupon rate of the bond is four per cent, meaning investors will get a secure four per cent payment every year for 16 years, or for however long they keep the bonds. The bank said it allotted $2.734 million to non-competitive applications.
In the October 11 information memorandum, when the auction was announced, Nipdec said the bonds were being issued as part of “a three-phase borrowing programme totaling $2.7 billion over the period 2013 to 2015,” meaning Nipdec will be coming back to market—not necessarily the bond market—to borrow another $1.7 billion before 2015.
The proceeds of the bond issue, Nipdec said, “will be used to finance the Programme for the Upgrade of Road Efficiency (PURE), is an extensive programme of road repairs and enhancement throughout T&T through the Ministry of Works and Infrastructure.” This will include improvements to existing road infrastructure; implementation of traffic management measures; development of alternative access routes; stabilisation and reinstatement of failed slopes; bridge construction and repairs.
Nipdec currently provides five core business services—property development, mechanical, electrical and facilities management, real estate services, commercial services, procurement and contract management. In the memo, the company showed investors an audited profit after tax of $7.751 million but for the period ended June 30, 2012. It said gross revenue earned in the period amounted to $69.45 million and operating expenses stood at $50.85 million.
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.