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An aerial view of Nassau, Bahamas

Bahamas successfully raises US$600 million bond offering

An aerial view of Nassau, Bahamas

The Bahamas government says it has been able to take advantage of a positive market window to “successfully price” a US$600 million issue of 8.95 per cent bonds, due 2032 in the international debt capital markets.

The Bahamas (File photo)

“Given the strong shock to the Bahamian economy caused by Hurricane Dorian and now COVID-19, we are satisfied with the successful pricing of this bond issue and the positive response from the investor community, which reflects the market’s ongoing confidence in The Bahamas,” said Finance Minister K. Peter Turnquest.

“Despite the interruption in our fiscal consolidation objective, the government is undeterred in its commitment to pursue a credible fiscal policy and achieve debt sustainability and to pursuing the structural reforms that would release a strong level of economic growth.

“This will improve The Bahamas’ prospects for enhancing its funding cost fundamentals vis-vis the credit markets,” said Turnquest.

Deputy Prime Minister of The Bahamas and Minister of Finance K Peter Turnquest (Photo: EW News)

A statement from the Ministry of Finance said that it was achieved amidst global market volatility driven by a resurgence of coronavirus (COVID-19) cases globally, as well as increasing uncertainty around the upcoming United States elections.

“This new transaction benefitted from the momentum created during a successful virtual investor road show that The Bahamas conducted on October 5 and 6, at which time the government met with over 45 global investors,” the statement said.

It said that a team from the Ministry of Finance, led Turnquest presented investors with an update on economic and financial trends in country, as well as the government’s recent policy initiatives for combating the COVID-19 pandemic and plans for reopening of the tourism sector.

An aerial view of floods and damages from Hurricane Dorian on Freeport, Grand Bahama on September 5, 2019. (Photo by Adam DelGiudice / AFP)ADAM DELGIUDICE/AFP/Getty Images

“The order book closed with indications in excess of US$1.1 billion, and with over 140 accounts participating—including many new investors in Bahamas debt. The 11-year weighted average life bond was priced with a coupon (interest rate) of 8.950 per cent per annum, payable semi-annually in arrears, with principal amortization payable in three equal annual instalments, commencing on October 15, 2030 and a final maturity date of October 15, 2032.”

The statement said that the proceeds of the issuance will be used to finance the government’s general 2020/2021 budgetary needs and to repay its indebtedness of US$248 million under the 2020 Bridge Facility.

“This transaction will add an additional US$352 million to the debt level of the country, and falls within the US$1.334 billion in approved financing for the current fiscal year,” the statement said, adding that “consistent with its debt management strategy, the Government intends to establish a sinking fund to assist in managing the future repayment obligations arising from this debt issuance”.

Credit Suisse Securities (USA) Inc. and RBC Capital Markets, LLC. managed the offer as joint book runners, the statement added.