Billion-Dollar International Bond a Big Hit, says T&T

Photo illustration of one hundred dollar notes in Seoul

The bond issue was more than three times oversubscribed, with US$3.5 billion in orders received from over 250 international investors, the government said.

 

PORT OF SPAIN, Trinidad, Monday August 1, 2016 – The Government of Trinidad and Tobago says it has successfully launched a 10-year bond in New York, marking its first international bond issue in three years.

And international credit rating agency Moody’s Investors Service has assigned a Baa3 rating to the bond which matures on August 4, 2026.

It said the ratings reflect, on one hand, low gross domestic product (GDP) growth rates, high exposure to oil and gas-related shocks, data limitations and weak fiscal policy execution capacity and, on the other hand, government’s consideration of a moderate and affordable debt burden, a Heritage and Stabilization Fund (HSF), and a relatively strong external position anchored by adequate foreign exchange reserves.

The bond issue was formally opened to order on July 28 and by 10:30 am, and was more than three times oversubscribed, with US$3.5 billion in orders received from over 250 international investors, the government said. The country was therefore able to comfortably raise the targeted US$1 billion, with prospects for raising additional amounts in excess of the required amount.

The original price for the bond was set at 4.625 per cent. However, the significant interest and demand from international investors buttressed by strong demand from the local investor community, allowed the final price of the bond to be tightened to 4.5 per cent, the government said.

“This pricing is reflective of the confidence of investors in the Government’s management of the economy and the medium term fiscal and monetary outlook. The 4.5 per cent interest cost of the bond compares very favourably with recent Government bond issues,” a statement from the government said.

Proceeds of the bond are to be utilized to finance the country’s Development Programme over the rest of this Fiscal Year as well as over the 2017 Fiscal Year.

The pricing of the bond followed a comprehensive roadshow in the major world financial centres of Los Angeles, London, Boston and New York July 25 to 27.

The roadshow involved one-on-one meetings with over 30 targeted investors in different locations, where presentations were made followed by question-and-answer sessions on the Trinidad and Tobago economy, revenue and expenditure, fiscal and monetary policy, oil and gas production, state enterprises, macroeconomic policy, foreign reserves, debt management, management of the Trinidad and Tobago currency and the exchange rate, among other things.

The roadshow sought to promote Trinidad and Tobago as a viable investment destination with a cohesive plan for fiscal consolidation and economic management in the face of plummeting oil and commodity prices.

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