$250 million gov’t debenture issue hits the market

Having successfully secured a $600 million loan from a consortium of local commercial banks, government is seeking to tap into increasing confidence in government’s debt instruments since the 2018-2019 debt restructuring exercise.

The Central Bank of Barbados, over the weekend, announced it was offering a $250 million Government of Barbados 20-year Debenture issue.

The issuance has a grace period of 10 years, which will then be followed by 10 years of equal quarterly payments to be made in February, May, August and November. 

A total of 40 payments will be made until 2044.

The interest rate on this long-term debt instrument is 7.75 per cent and government is offering it to the public for minimum purchases of $1 000. 

According to the Central Bank of Barbados, the issue will remain open until the bank advises that it has been fully subscribed.

The debentures, long-term debt instruments that are backed by sovereign, represent a shifting focus by government back to raising capital on the local market. 

In his mid-year report to the country, Minister of State in the Ministry of Finance Ryan Straughn highlighted revised total revenue for the financial year at $3.54  billion, while total expenditure is expected to reach $3.78 billion. 

On the matter of public debt, Minister Straughn reported that as of September 30, 2024, Barbados’ total public debt stood at $14.87 billion, or 104.8 per cent of GDP.

He, however, affirmed government’s commitment to responsible debt management, including timely debt service payments which totalled $717.8 million during the first half of the financial year.

“Our focus on public sector reform, debt management, and prudent fiscal policies will ensure that Barbados remains on a sustainable fiscal path whilst continuing to invest in the future of our people and our country,” Straughn said.

He highlighted restrained government expenditure, which stood at $1.70 billion, falling short of the forecasted $1.763 billion.

 Straughn shared that the underperformance in expenditure was mainly due to delays in capital project execution, projects such as road repairs and housing developments.

Parliament recently approved a $600 million loan from three local commercial banks as it pursues a debt-swap, where it repays higher interest loans with a new loan at a lower interest rate.

The loan is being financed by CIBC, Royal Bank and ScotiaBank. CIBC is structuring the 20-year loan.  

(IMC1)