Barbados Central Bank relaunches savings bonds programme with $10 million issue

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Governor of the Central Bank Dr. DeLisle Worrell says the Barbados savings bond is “one of the best kept secrets” in the country’s financial system.

 

BRIDGETOWN, Barbados, Thursday May 28, 2015 – The Central Bank of Barbados has relaunched its savings bonds programme, with the purchase limit for individuals doubling and joint purchasers quadrupling.

The BDS$10 million (US$5 million) bond issue, which takes effect on June 1, will have a $100,000 maximum purchase limit for individuals and benevolent organisations and a limit of $200,000 for joint purchasers, significantly higher than the $50,000 limit which applied to all investors previously.

“This upper limit ensures that the bonds reach the main target for which they are intended, namely small and medium savers. It has also been agreed to issue new series of bonds as supplies of available bonds are depleted, so that there will be no shortage of bonds for purchase at any time,” Governor of the Central Bank Dr. DeLisle Worrell said at yesterday’s relaunch.

The minimum purchase will be $50 and the bond issue will attract an interest rate of 5.5 per cent over a five-year period.

In addition to increasing the purchase limit, the Central Bank is also introducing a single certificate system, replacing the previous practice of issuing certificates of different denominations.

Worrell described the Barbados savings bond as “one of the best kept secrets of our financial system”, as he urged Barbadians to make the investment.

“In my view, every Barbadian should have savings bonds, because everyone should have a little savings set aside to cover life’s contingencies. There is no better vehicle for such rainy day savings than the saving bond,” he said.

“If nothing unexpected turns up and you hold your bonds for the full five years, you will earn $100 for an investment of $76.24. However, if you do need cash in the period before the bond matures, you can cash the whole bond or any portion thereof at any time. Naturally, early encashment comes with a lower return than if you held the bond until it matures, but you will always get more than you put in, so long as you hold the bond for more than a year,” Worrell added, contending that the savings bond is “every bit as convenient as a savings account at a commercial bank”.

The Central Bank Governor said it was “a mystery” to him that financial advisors were not informing individuals about government savings bonds and their importance.

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