JavaScript is disabled in your web browser or browser is too old to support JavaScript. Today almost all web pages contain JavaScript, a scripting programming language that runs on visitor's web browser. It makes web pages functional for specific purposes and if disabled for some reason, the content or the functionality of the web page can be limited or unavailable.

Tuesday, July 22, 2025

T&T to issue US$500m sovereign bond

by

20131206

Ac­com­pa­nied by Cen­tral Bank Gov­er­nor Jwala Ram­bar­ran, Fi­nance Min­is­ter Lar­ry Howai yes­ter­day led a team of tech­nocrats on a North Amer­i­can road show to pro­mote the coun­try's first sov­er­eign bond is­sue since 2007.The US$500 mil­lion eu­robond is be­ing arranged by Cit­i­group and gov­ern­ment is plan­ning to is­sue it this month. The bond will be priced much clos­er to the day of is­sue, Fi­nance Min­istry of­fi­cials con­firmed.

While there will be no carve out for the lo­cal mar­ket, T&T cit­i­zens will still be able to pur­chase the bond through lo­cal in­sti­tu­tions that will have to buy the bonds from Cit­i­group.

A bond is like a loan to a gov­ern­ment or cor­po­ra­tion usu­al­ly to un­der­take ma­jor works, but some­times to mop up ex­cess liq­uid­i­ty–too much idle mon­ey in the banks. Bonds is­sued with the full faith and cred­it of the gov­ern­ment are called "sov­er­eign bonds" and are au­to­mat­i­cal­ly rat­ed by the in­ter­na­tion­al rat­ings agen­cies. Stan­dard & Poor's, one of the largest and old­est, has long main­tained an AA rat­ing on its as­sess­ment of T&T.

T&T is is­su­ing the bond al­though it has more than US$9.4 bil­lion in of­fi­cial for­eign re­serves and US$5 bil­lion in the Her­itage and Sta­bil­i­sa­tion Fund.A pos­si­ble ex­pla­na­tion could be that the Cen­tral Bank is con­cerned about the rate of de­ple­tion of T&T's for­eign re­serves. How­ev­er, the Cen­tral Bank re­ferred all ques­tions on the bonds to the Min­istry of Fi­nance and the Econ­o­my.

The bond is be­ing is­sued on in­ter­na­tion­al cap­i­tal mar­kets, al­though T&T com­mer­cial banks are sit­ting down on US$3.8 bil­lion in US-dol­lar de­posits. By is­su­ing it on the in­ter­na­tion­al cap­i­tal mar­ket, T&T's banks and in­sur­ance com­pa­nies will be able to bid for the bonds, but T&T in­di­vid­u­als will have to buy the bonds from these in­sti­tu­tions.

The bonds are be­ing is­sued in the con­text of the ex­pec­ta­tion that the US Fed­er­al Re­serve will start to ta­per its quan­ti­ta­tive eas­ing in March next year. Yes­ter­day, on news that the US gross do­mes­tic prod­uct (GDP) grew by 3.6 per cent in the third quar­ter (3Q) of 2013–more than an­a­lysts ex­pect­ed –mar­kets re­act­ed in an­tic­i­pa­tion that ta­per­ing is sure to hap­pen. US stocks de­clined and the US dol­lar weak­ened against the eu­ro.

Ta­per­ing, in lay­man's terms means that the US ver­sion of a cen­tral bank (the Fed) had been pump­ing mon­ey in­to the US econ­o­my by vo­ra­cious­ly buy­ing back gov­ern­ment se­cu­ri­ties from the pub­lic. Ta­per­ing will mean the Fed will slow down the rate at which it is buy­ing back the gov­ern­ment-is­sued in­stru­ments.

The US-dol­lar T&T sov­er­eign bonds are ex­pect­ed to be is­sued by the gov­ern­ment of T&T and not the Cen­tral Bank. For­mer Fi­nance Min­is­ter Win­ston Dook­er­an had said in a March 2012 in­ter­view in Uruguay that the USD sov­er­eign bonds would have been is­sued in Sep­tem­ber 2012.


Related articles

Sponsored

Weather

PORT OF SPAIN WEATHER

Sponsored