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Details of govt’s $750 mil. bond issue revealed

Govt seeking to raise the capital via a ten-year bond with nine-year average life
Peter Turnquest.

The government’s move to seek a new bond deal valued at $750 million has managed to impress some international investors while others, not so much.

Guardian Business understands that the government is seeking to raise the capital via a ten-year bond with a nine-year average life.

This paper can also reveal that the bond issue is expected to be priced today between 5.875 percent and 6.125 percent.

The pricing reflects the effects of Standard & Poor’s downgrade of The Bahamas’ crediting rating to “junk status” last year December.

Yesterday, Tribune Business reported that the government is aiming to raise up to $800 million via a U.S. dollar bond to cover its deficit financing needs for the current and previous fiscal years. The Tribune also reported that it understood Deputy Prime Minister Peter Turnquest and Financial Secretary in the Ministry of Finance Marlon Johnson have been on a week-long trip which is said to have included the U.S., London and other European financial capitals.

According to a source, the client feedback from the London part of the trip was mostly positive.
Guardian Business understands that the government’s pitch to investors went well and prospective investors see the potential.

On the other hand, other investors are worried about the country’s growth rate in terms of gross domestic product (GDP), given that it has been negative and flat these past three years. GDP grew marginally, by just 0.2 percent in 2016.

The source also indicated that other areas of concern include changing the accounting basis for calculation of the deficit from a cash-based system to an accrual-based accounting system.
Yesterday, Prime Minister Dr. Hubert Minnis announced that the government plans to transition its public financial reporting in the central government to an accrual-based system by the end of June 2022, and in the public sector at large by 2023.

This paper understands that the bond issue is expected to refinance loan facilities from Deutsche Bank, Royal Bank of Canada and Credit Suisse.
However, it is still unclear as to what percentage of the money will be allocated for refinancing loans and what part will go towards the deficit.

Turnquest said in October that the country’s government finance statistics deficit for the 2016/2017 fiscal year stood at t $695 million. The numbers for the last month (June) of the previous fiscal year have yet to be included in that estimate, indicating that it could be subject to an increase.

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