The Tribune

By NATARIO McKENZIE

Tribune Business

Reporter

nmckenzie@tribunemedia.net

Some 80 per cent or $120 million of the Government’s Hurricane Restoration Bond will be raised from the commercial banks, the Government yesterday confirming the offering’s multi-tiered nature.

Prime Minister Perry Christie confirmed that the Government will seek to raise the $30 million balance, or remaining 20 per cent, from non-bank investors, including wealthy foreign residents from the Bahamas.

Mr Christie said the commercial banks contacted by the Ministry of Finance had “readily” agreed to participate in the offering, as he opened debate on the resolution authorising the Government to borrow up to $150 million to finance Hurricane Matthew restoration.

“The Ministry of Finance approached the commercial banks seeking funding. All of these banks understand the Government’s position,” he said. “They follow the IMF’s rating and advice; they follow the rating agencies. The banks are aware of where the Government is.

“All of these banks have a stake in the economy and are deeply invested in the Bahamas. RBC is the Government’s banker. It is with great pride that I know that all of the banks contacted have readily agreed to participate in the financing we are presenting by way of resolution to Parliament.”

Tribune Business understands that the Central Bank ‘sweetened’ the bond issue by agreeing that these securities could be counted as part of the banks’ liquid asset reserves (LAR), which can be pledged in times of emergency to raise cash.

Meanwhile, Mr Christie adsded that ordinary citizens and residents of the Bahamas have expressed and interest in participating in the bond, with a $30 million tranche allocated to meet that demand.   

“The Ministry of Finance has developed a two-tranche financing; a tranche for commercial banks of up to $120 million, and a tranche for the public of up to $30 million,” the Prime Minister added.

“In addition, the Central Bank has recommended  that non-residents with  nexus to the Bahamas be allowed to participate  in this offering.

“These are high net worth individuals who live in the Bahamas, and the Central Bank would facilitate their participation in the $30 million offering.”

Michael Halkitis, minister of state for finance, said investors would receive an interest coupon of just over 4 per cent.

“We will raise this financing at rates below the Prime rate, which is less than 4.5 per cent, and the Prime rate is 4.75 per cent.  My advice is we will raise this money at just over 4 per cent,” he added.