The introduction of government bonds onto the Bahamas International Securities Exchange (BISX) will hopefully boost funding for businesses through capital markets, Deputy Prime Minister and Minister of Finance Peter Turnquest said.
Moving Bahamas government registered stock (BGRS) away from the monetary authority of the Central Bank of The Bahamas (CBOB) and onto the capital market is expected to pave the way for investors to deploy grant and investment capital, providing more equitable opportunities.
“Eventually we hope that this will stimulate the capital markets as a whole, which will make funding available to entrepreneurs that may be looking for investors but don’t want to take on an equity partner per se,” Turnquest said.
BISX began listing BGRS earlier this month and trading is expected to begin in November.
Turnquest said in addition to providing a deeper pool for trading activity on BISX, the release of the bonds would provide much-needed stimulation to the local capital market.
“One, we are trying to move away from the central bank being the primary short-term lender to the government as is mandated by the Central Bank Act and there will be a new act that we’re drafting. Two, it gives liquidity to the market. It gives an opportunity for people to invest and not just at a bond issuing date, but throughout the year they can buy and sell these bonds,” he said.
“And again, depending on what the economy is doing the bonds can trade at a premium or at a loss. It gives more flexibility. It gives the market a better opportunity to discover what the real price of these bonds ought to be, not just the face value but what the real value of the bond ought to be. You now as an investor have the opportunity to not only share in the interest – which is a fixed interest – but you can also share in the interest in these investments as they are traded.”