The Bahamas International Securities Exchange (BISX) yesterday revealed the value of the more than 200 tranches of Bahamas government registered stock (BGRS) it has now listed at $3.5 billion.
BISX Chief Executive Officer Keith Davies said the listing of the BGRS on BISX would provide the average Bahamian with easier access to information on government bonds.
“Once those 200-plus tranches of government debt are listed on the exchange, you will be able to log on to our website and access that information through any of our broker dealer members and they will be able to tell you in real time what securities are available, what the prices of those securities are and how they can be accessed,” Davies said on the Guardian Talk Radio show “The Revolution” yesterday.
“So, overnight we now have available information which you can act upon. That’s crucial. As you know, from an investment standpoint I always tell people this, if you don’t have any information, don’t make an investment decision. Informed investment decisions depend on access to and availability of information, and so transparency affords that.”
The Ministry of Finance announced last week that its entire portfolio of BGRS would be listed on BISX beginning this month and would be available for trading in November.
Asked why Bahamians should invest in government stocks, Davies said they are the most stable.
“The stocks of any government are considered to be the most secure investment that an investor can make, because governments have amazing capacities to raise money to pay for what they borrow. So, when the government issues the securities, everything else in the country is benchmarked against what the government is doing. So, they are considered in most instances to be the most secure investment or security available. They are also the deepest and most liquid,” he said.
“What does that mean? Who invests in government bonds? Banks. Banks use this as reserved currency in terms of meeting their capital requirements and other methods of investment that the bank takes. So that’s a key component of investment.”
But Davies pointed to a caveat.
“Yes, it is deemed to be the safest, but if governments aren’t careful and don’t take control of their finances you can have a situation where a government borrows so much that it can’t pay it back and then defaults. Therein lies the difficulty, but if that happens the entire country is in problems,” he said.
“So, you get involved, you demand fiscal responsibility, you pay attention to what’s happening in the country. But that’s the premise upon which government stock is premised to be the most secure investment a person can make.”