Sunday, Jul 21, 2019
HomeBusinessDPM: $39M to sinking fund used to pay off $750M bond issue

DPM: $39M to sinking fund used to pay off $750M bond issue

Government has allocated $39 million of the 2018/2019 fiscal budget to a sinking fund, which will be used to pay off the $750 million bond issue it secured late last year.

The bond issue was secured in November to refinance and term out several U.S. dollar bank loan facilities and domestic treasury bills and bank advances.

The bond was issued at a rate of six percent and will come due in ten years.

What this means is that government is taking measures to reduce the number of bonds on its books, thereby educing the amount of interest it pays when the bond becomes mature in 2028.

“Just so the public would know, the refinancing that was done was to convert short-term higher interest bearing instruments to longer term, lower interest bearing debt instruments, reducing our interest expense,” said Deputy Prime Minister and Minister of Finance Peter Turnquest during the presentation of the government’s budget in the House of Assembly yesterday.

At the time of the announcement of the bond issue in November, the Ministry of Finance said that the 10-year weighted average life bond is “payable semi-annually in arrears, with principal amortization payable in three equal annual installments, commencing on November 21, 2026 and a final maturity date of November 21, 2028”.

A sinking fund is commonly used to buy back bonds over the life of an issue and retire them to lower the principal amount due at the maturity date.

The Ministry of Finance said Deutsche Bank Securities Inc. and RBC Capital Markets LLC managed the offer as joint book runners.

Paige McCartney

Business Reporter at The Nassau Guardian
Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas.
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News
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