Trinidad and To­ba­go has main­tained a long re­la­tion­ship with Switzer­land’s glob­al bank Cred­it Su­isse, which was ac­quired by its larg­er Swiss com­peti­tor, UBS, on Sun­day for US$3.25 bil­lion, a frac­tion of its val­ue be­fore the COVID-19 pan­dem­ic. The ac­qui­si­tion in­volved the write­off of US$17 bil­lion in bonds called AT1s.

The T&T Gov­ern­ment has turned to Cred­it Su­isse to arrange a num­ber of US-dol­lar loans for the coun­try. The Swiss bank was cho­sen as the joint lead man­ag­er (with ma­jor­i­ty State-owned First Cit­i­zens) and arranger of the ten-year US$500 mil­lion loan that T&T re­fi­nanced in June 2020, fol­low­ing a road­show to North Amer­i­ca by Fi­nance Min­is­ter, Colm Im­bert.

He de­scribed the bond of­fer as “very suc­cess­ful” as it was over­sub­scribed by 219 per cent and came in at an in­ter­est rate of 4.50 per cent, when the ini­tial in­dica­tive rate was 4.75 per cent.

In a state­ment fol­low­ing the bond is­suance, Im­bert said: “Spe­cial com­pli­ments must go to Cred­it Su­isse and its lo­cal part­ner First Cit­i­zens Bank who were se­lect­ed as the joint lead man­agers for this trans­ac­tion through a rigourous com­pet­i­tive bid­ding process, for be­ing able to suc­cess­ful­ly com­plete this sig­nif­i­cant in­ter­na­tion­al fi­nanc­ing bond is­sue in less than one busi­ness day.”

The Swiss bank, along with the ac­tu­ar­i­al firm Mil­li­man, was al­so cho­sen by for­mer Min­is­ter of Fi­nance, Karen Tesheira and for­mer Cen­tral Bank Gov­er­nor, Ewart Williams, in 2009 to for­mu­late the first plan to re­struc­ture the CL Fi­nan­cial group, along with its main as­set, the in­sur­ance com­pa­ny CLI­CO.

One of T&T’s fore­most cit­i­zens, Wen­dell Mot­t­ley be­came an in­vest­ment banker at Cred­it Su­isse in New York 1996, serv­ing as man­ag­ing di­rec­tor and se­nior ad­vi­sor over the next 15 years.

A grad­u­ate of Yale and Cam­bridge uni­ver­si­ties, Mot­t­ley joined Cred­it Su­isse af­ter serv­ing as Min­is­ter of Fi­nance be­tween 1991 and 1995. He al­so served as Min­is­ter of Hous­ing and Re­set­tle­ment from 1981–1985 and was then ap­point­ed as Min­is­ter of In­dus­try and Com­merce, serv­ing from 1985–1986.

Cred­it Su­isse was al­so the fi­nan­cial ad­vi­sor to the Gov­ern­ment and the leader of a syn­di­cate of lender in 2019 that re­fi­nanced Petrotrin’s debt of over US$1 bil­lion.

OW­TU link

Al­though Cred­it Su­isse had de­vel­oped a rep­u­ta­tion as the T&T Gov­ern­ment’s go-to in­ter­na­tion­al banker, it was cho­sen by Pa­tri­ot­ic En­er­gies and Tech­nolo­gies Ltd, a com­pa­ny cre­at­ed by the Oil­fields Work­ers Trade Union (OW­TU) in 2020 to ac­quire the Petrotrin re­fin­ery at Pointe-a-Pierre as well as the Paria Fu­el Trad­ing Com­pa­ny.

OW­TU’s pres­i­dent gen­er­al, An­cel Ro­get, held a news con­fer­ence on Jan­u­ary 19, 2021, to out­line the trade union’s sec­ond bid for the re­fin­ery, boast­ing that it had se­cured the fi­nan­cial sup­port of Cred­it Su­isse to the tune of US$500 mil­lion.

But in a news re­lease on Feb­ru­ary 20, 2021, Fi­nance Min­is­ter, Colm Im­bert, said the OW­TU ap­peared to have “a com­plete mis­un­der­stand­ing of the true na­ture of trans­fer­able tax cred­its as com­pared to tax con­ces­sions or in­cen­tives to in­dus­try.”

Im­bert said the fun­da­men­tal con­di­tion­al­i­ty in the fi­nanc­ing pro­pos­al from Cred­it Su­isse was that the Gov­ern­ment was re­quired to is­sue to Cred­it Su­isse, through Pa­tri­ot­ic, US$750 mil­lion in ful­ly trans­fer­able and trade­able tax cred­its in ex­change for the US$500 mil­lion that would be paid to Trinidad Pe­tro­le­um Hold­ings for the re­fin­ery and Paria.

“In oth­er words, the Gov­ern­ment was re­quired to give Cred­it Su­isse US$750 mil­lion in ful­ly trans­fer­able mon­ey mar­ket in­stru­ments, which in­stru­ments Cred­it Su­isse had stat­ed up front that they planned to sell on the open mar­ket. Pa­tri­ot­ic would then get the re­fin­ery and Paria for free, hav­ing put up no mon­ey, col­lat­er­al or se­cu­ri­ty and could mort­gage the re­fin­ery and Paria as they saw fit,” said Im­bert, in the news re­lease.

Mu­tu­al funds

Ear­li­er this week, the Busi­ness Guardian asked four of T&T’s largest mu­tu­al fund com­pa­nies whether they held Cred­it Su­isse bonds in their port­fo­lios, es­pe­cial­ly the AT1s.

Ma­jor­i­ty State-owned com­mer­cial bank, First Cit­i­zens, was the on­ly mu­tu­al fund en­ti­ty that ad­mit­ted to hold­ing the Swiss com­pa­ny’s debt. The lo­cal bank holds bonds val­ued at $5.24 mil­lion in its El Tu­cuche Fixed In­come Fund, which has a port­fo­lio of $115 mil­lion.

A First Cit­i­zens spokesper­son said: “As per the top-ten hold­ings re­port dat­ed Feb­ru­ary 28, 2023, the El Tu­cuche Fund had a 4.5 per cent ex­po­sure to Cred­it Su­isse via a fixed in­come bond ma­tur­ing in Au­gust 2023. This bond is not in­clud­ed in the cat­e­go­ry AT1 bonds and has not been af­fect­ed by any of the re­cent ac­tions with re­spect to Cred­it Su­isse. Unithold­ers will con­tin­ue to be up­dat­ed via the web­site on any change in ex­po­sure.”

Fol­low­ing re­ceipt of ques­tions on the is­sue Mon­day, First Cit­i­zens post­ed in the news and no­tices sec­tion of its web­site, a list of the top-ten hold­ings of its four mu­tu­al funds. Three of the mu­tu­al funds–the Im­mortelle Fund, the Paria Fund and the Aber­crom­bie Fund car­ried lan­guage be­low the top-ten hold­ings list that the fund “does not have any ex­po­sure to Cred­it Su­isse, Sig­nat­ue Bank, Sil­i­con Val­ley Bank or First Re­pub­lic Bank.

An RBC spokesper­son said: “We pre­fer to de­cline com­ment, as we are not in a po­si­tion to an­swer at this time.”

The Re­pub­lic Bank spokesper­son said: “The Re­pub­lic Bank Group man­ages ex­po­sure in our pro­pri­etary funds cau­tious­ly and is not im­pact­ed by the re­cent de­vel­op­ments in the glob­al bank­ing sec­tor.”

A Unit Trust Cor­po­ra­tion ex­ec­u­tive said: “Our pol­i­cy is that we do not dis­close in­vest­ment po­si­tions out­side of the top ten hold­ings to ex­ter­nal par­ties.” —An­tho­ny Wil­son