Their original offer is now off the table, but as Barbados struggles to get out of an economic rut multi-millionaire investor and financier Andrew Stewart and his business partner Stuart Fordham say they are still willing to help.
At the end of 2014, Stewart, the chairman of the stockbroking and investment management firm Ravenscroft Limited, and Fordham, a bond trader, revealed their willingness to help the island raise up to US$1 billion through the issuance of bonds, given its dwindling reserves.
However, after about seven meetings over a seven-month period, including some with Minister of Finance Chris Sinckler, Central Bank Governor Dr DeLisle Worrell and Minister of International Business Donville Inniss, the offer, which was put on the table in the wake of a downgrade by the international credit ratings agency Standard & Poor’s (S&P), was refused.
One of the concerns of the Freundel Stuart administration was that even though the investors had initially suggested that their global partners were willing to purchase “large bonds” in any currency, the actual proposition was for the bonds to be issued in Euros.
However, if Government were willing to reopen the discussions, the bonds could be issued in US currency, Stewart said Thursday, adding that all he would need to do “just as we did two years go, we go and make a few telephone calls” to some of the major investors in the world.
“We would then chew that over in a couple of weeks and then we would come back with a firm proposition. And the proposition just like the previous proposition, would be underwritten by one of the major banks in the world,” he said, while stressing that there would need to be “a firm indication” from Government that they were willing to go through with it.
Fordham also cautioned that even though they were still willing to help the country, the conditions of the market were now different, including the level of interest rates.
“The time when we expressed to the ministers it was the best time. There was such a desire and a demand for yield and for interest. Other government bond markets around the world were in negative interest rates and so to be able to find something as attractive as an eight per cent yield was highly interesting,” he explained.
“I would say now that the fact is that ship has sailed. We didn’t hear back. We tabled a serious offer, Andy [Stewart] and I, for over US$1 billion. The timing was absolutely perfect. But that is not to say that another ship won’t come along, but it would look completely different. It would be a substantially different level of interest,” he added.
However, Fordham said on the positive side, more attractive investments were expected to become available internationally.
In terms of Barbados’ most recent downgrades, Fordham did not dismiss the regional rating agency CariCRIS out of hand.
However, he said the type of investors that he and Stewart were targetting were more likely to use Moody’s and S&P as their benchmark.
He therefore described S&P assessment of the island as “interesting” while not that the United States based ratings agency was still sticking to its decision to downgrade the island in September last year and that it has retained a negative outlook for Barbados due to a lack of projects getting started, high current account deficits and Government’s inability to improve its access to financing.
“Most interestingly for us was the Government’s decision not to tap the international credit markets, which was what Andy and I spoke to them about in 2014/2015 and tabled the offer. It was the perfect timing to do that. I think it is interesting to see that S&P has picked up on the fact that it has made a decision not to pursue those bonds,” he said.
In relation to the performance of the economy, Fordham said he was satisfied that things were “stabilizing” due to the solid performance of the tourism industry last year and projections for this year.
He said despite the current economic conditions, “if one is looking at the glass as half full as opposed to half empty, one might begin to make a statement that hopefully we might be able to build a base from here and move forward in a more positive [way]”.
While expressing his love for the island and pledging to make continued investments here, Stewart said the international investors and bond buyers had no interest in which political party was in power, but were concerned about the country’s ability to repay them and at the promised interest rate.
However, he warned that there was an unacceptably high level of bureaucracy that was negatively impacting investors, including some “major hotels” that would like to expand.
During the wide-ranging interview, he also said he believed the level of taxation here was way too high.
And while recalling the recent Sagicor relocation to Bermuda, Stewart suggested that Government looks at a possible tax incentive schemes to help keep companies here. He also suggested that there should be “a green channel” in customs for travellers who have nothing to declare.