Three years after completing its debt restructuring programme, which resulted in millions of dollars in losses to bondholders, Government is issuing its first major bond offer.
The $125 million Treasury Notes opened on Monday, November 22, 2021, is aimed at raising funds to assist with the financing of the economic recovery from the COVID-19 pandemic.
The notes, which are available from $1,000 and up and attracts an interest rate of 4.25 per cent, will be issued on December 1, 2021, and will maturity in 2026. Interest will be payable on February 28, May 31, August 31 and November 30 of each year.
Addressing the annual Eckler Pension Investment conference on Tuesday, Central Bank Governor Cleviston Haynes urged the pension sector to invest in government securities.
He pointed out that while government had withdrawn from new debt issuance, apart from the Barbados Optional Savings Scheme (BOSS) bonds that were specifically targeted to public servants, the focus has been on retiring debt and this has contributed to the build-up of excess liquidity in the financial system.
“Over the last few days, however, Government announced issuance of its first major debt instrument post the debt restructuring. The proceeds from this bond issue are intended to help finance the economic recovery from the COVID shock,” said Haynes.
“The bond is targeted to all investors and represents the first step towards restoring normality to the domestic capital market, while creating greater balance between new domestic and external funding,” he said.
The economist pointed out that the new debt issuance was consistent with the macroeconomic framework under the Barbados Economic Recovery and Transformation (BERT) programme with the International Monetary Fund (IMF) and was in line with the medium-term debt trajectory which aims to reach 60 per cent by financial year 2035/36.
“In this regard, as the economy recovers, Government will revert to its programme of fiscal consolidation through primary surpluses, enabling the temporary increase in the debt-ratio to taper off as Government continues to honour its debt obligations,” said Haynes.
Barbados’ public debt as of September 30, 2021 was approximately $13.1 billion, of which Treasury Bills outstanding stood at $495.1 million, according to Central Bank records. The last major issuance of Treasury Notes was in 2016.