BRIDGETOWN, Barbados – The Barbados government has announced plans for raising BDS$300 million on the local market that will be used to finance its operations and manage debt more affordably.
Minister in the Ministry of Finance Ryan Straughn speaking at post cabinet news conferenceMinister in the Ministry of Finance Ryan Straughn told a post-Cabinet press conference that the Mia Mottley government will undertake a non-deal roadshow to attract more foreign investors.
He said given that Barbados is about to end its three-year International Monetary Fund (IMF) restructuring loan programs next month, the “government will be undertaking a non-deal road show to be able to go and sensitize potential investors as to what Barbados has to offer.
“You would appreciate that we have had a significant amount of investment take place in the country; and therefore, once we are on the road, we will be meeting with investors who currently hold Barbados paper and looking to make sure that they understand exactly what, not just the government but the country is going with respect to levels of investment.”
Straughn said the government has already begun rolling out domestic measures to raise millions in financing, announcing the issuance of two new sets of bonds, including the country’s first-ever US-dollar denominated bond targeted at Barbadians with foreign currency bank accounts.
“The government has launched a US denominated bond to be able to attract some financing within the domestic market. You will recall that when we came to office we allowed, as consistent with respect to the liberalization of the capital account for CARICOM, we allowed Barbadians to hold US dollar accounts, and therefore, we are targeting those persons with respect with the ability to raise BDS$100 million.
“Three per cent is the interest rate over 18 months; and therefore, those resources that are now available in the banking system, BDS$1.6 billion that was accumulated over the last few years, earning zero per cent,” Straughn told reporters, adding that he wanted to bring that to the attention of the country “ how government restarted the capital market… was able to ensure then that we can provide opportunities for as many Barbadians to be able to help finance the development of Barbados”.
Straughn said that Cabinet has also approved an extension of the Barbados Optional Savings Scheme (BOSS) bond program, allowing for a further BDS$200 million to be made available to the public from June 1.
“BOSS bonds, as you know, are five-year bonds earning four and a half per cent; and therefore, the government, as part of how we are able to rebuild our yield curve coming out of the debt restructuring, that is part of the issuance to Barbadians that we want to bring to their attention,” Straughn announced.
He said that early feedback indicates strong interest in the bonds, but the government will continue to monitor uptake to ensure targets are met.
“We have been utilizing liability management as part of how we are able to ensure that Barbadians pay less in interest going forward, as well as create space for government. So, it is a financing mechanism to make sure that we create as much fiscal space as possible,” he said, adding that Barbados capital program still requires financing, making the bond initiative critical.
“But you would appreciate that we are ensuring that there are opportunities for Barbadians to invest in a different instrument because we have never done an invest denominated issuance exclusively before. So, this is the first time that it is happening domestically, and it is very targeted, because you have to effectively have a foreign exchange bank account to be able to participate in it.
“We are excited that there is enough appetite there that allows us to be able to raise those resources. It’s over 18 months, as I said, very, very targeted in relation to rebuilding the yield curve.
“But, as we look at how we utilize these resources over the course of the next few years, for financing government, some of it will specifically go towards liability management, effectively replacing more expensive debt with cheaper debt, but equally, where there are government’s operations to be financed, we will utilize our finances,” the Junior Finance Minister said.
