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T&T’s US$ bond oversubscribed

Published: 
Friday, December 13, 2013

The Government’s US$500 million ($3.2 billion), ten-year benchmark bond has been heavily oversubscribed, with international investors agreeing to offer an interest rate of 4.375 per cent for T&T’s first issue on the international capital market since 2007. Sources with first-hand knowledge of the bond issue said it received very strong demand from the international investor community, leading to an initial oversubscription rate of 9.9 times the original size with total demand of US$4.9 billion ($31.6 billion). 

 

The sources described T&T’s return to the international capital markets after an absence of six years as a spectacular success. Given the robust demand, they said the Government was able to increase the offer by a further US$50 million to US$550 million ($3.55 billion) and tighten the interest rate by 0.375 per cent from the initial rate of 4.75 per cent.

 

The sources said the strong demand could have allowed Minister of Finance Larry Howai to increase the bond even more, but he is reported to have advised the international capital market that T&T has a responsibility to manage its debt levels in a prudent manner.

 

The issue, which is being described as “benchmark” issue, will be part of the emerging market bond index. The extra US$50 million facilitates local investors acquiring some of the bond issue. Some international investors who applied for the bond did not get any and will be forced to buy in the secondary market.

 

The marketing process for the bond, was led by a delegation which included members of the Ministry of Finance and the Economy as well as the Central Bank and involved an investor roadshow through Los Angeles, New York and Boston. Minister of Trade Vasant Bharath also led a delegation in London. The bond proceeds will contribute to the financing of the 2014 budget and will be used to support the Government’s operations during fiscal year 2014. 

 

In a statement last week, the Ministry of Finance said that provision has also been made for a portion of the budget to be financed on the local market as well. T&T currently has two outstanding international bonds—a US$250 million bond due 2020 and a US$150 million bond due 2027.

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