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Imbert: Great interest in NIF 20 year bonds

Friday, July 13, 2018

There is particular interest in the 20 year bond offered through the National Investment Fund Holding Company Limited (NIFHCL). The tax-free bonds, which are priced from $1000 and will be available until August 8, were launched yesterday.

Finance Minister Colm Imbert, who spoke about the bonds in an interview on CNC3’s The Morning Brew, suggested that all citizens get involved and described the bonds as a great investment.

He said extensive market research was conducted which showed unusual demand for the 20 year bonds, especially since insurance companies plan for the long term. The 20 year bonds would be perfect for insurance companies, Imbert said.

“In order to make sure this exercise is a success, what we have done over the last week or so is meet with potential large investors. I’ve met with my team and the expert advisors with the insurance companies, banks, pensions funds, credit union league and some energy companies, just to get a sense where they are going with this.

“I was quite surprised to learn of the deep interest in the 20 year bond,” Imbert said.

Under the new Insurance Act, the 20 year bond can be included in particular insurance companies and their portfolios.

“We got approval from the Central Bank on Monday that these bonds will qualify for the statutory fund of insurance companies,” the minister said, adding that approval was also given by the T&T Securities and Exchange Commission (TTSEC).

On why bonds were chosen, Imbert explained that Government and its consultancy services reviewed the technical underpinnings of issuance of units or shares by a fund or by a company and their capacity to raise the appropriate amount of funds. He said the bonds are backed by assets which are primarily listed companies and the interest rates are one per cent above Government borrowing rates.

The fixed income asset-backed corporate bond “will be a unique instrument being marketed on Trinidad and Tobago’s capital market,” he said.

Imbert said the interest on the bonds will be tax free for the purpose of corporation tax.

“In the first place, individuals don’t pay tax on interest on bonds. This is for two reasons—we are giving back and also to make the issue attractive. We had quite a battle over the assets of Clico,” he said.

The bonds, which can be purchased for $1,000 or in multiples of $1,000, are tradeable on the T&T Stock Exchange. They will be offered in three tranches with high interest—five years (4.5 per cent), 12 years (5.7 per cent) and 20 years (6.6 per cent )

They are supported by some of the strongest companies, with a collective market value of approximately $7.9 billion, including shares of Republic Financial Holdings Limited, One Caribbean Media Limited, West Indian Tobacco Company Limited, Angostura Holdings Limited, and Trinidad Generation Unlimited.

NIFHCL was formed recently as a vehicle to monetise assets transferred to Government from CL Financial (CLF) and its subsidiaries. This is in order for Government to recover funds owed from its $23 billion bailout of Clico after the insurance giant’s 2009 collapse.

The Government expects to raise $4 billion through NIFHCL’s portfolio which is worth $8 billion and is targeting big companies as well as individuals for the bonds.


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