NASSAU, BAHAMAS- The Bahamas has successfully raised $1.067 billion through an international bond issuance, but one leading financial expert is questioning whether the timing of the transaction, given high global interest rates and no immediate debt maturity pressures.
The transaction, marking the country’s first international bond issuance since 2022, was announced in a statement issued by the Office of the Prime Minister (OPM).
According to the OPM, the new bond was met with strong demand, attracting interest from more than 60 institutional investors across North America, Europe, and the Middle East. The order book was 3.9 times oversubscribed, and the bond priced at a final coupon and re-offer yield of 8.25 percent.
The government noted that the transaction will reduce principal repayments by $451 million over the next three years and extend the average maturity of its Eurobond portfolio by 2.1 years. A portion of the proceeds will also be allocated to key infrastructure and development priorities.
While the Davis administration touted the successful uptake as a vote of confidence in the country’s economic and fiscal trajectory, one leading financial expert has raised questions about the cost and timing of the deal.
Gowon Bowe, CEO of Fidelity Bank (Bahamas), acknowledged that the strong investor response signals significant market confidence.
“The first thing that I think is very important, and should not be understated, is that the actual level of subscriptions that were indicated, and the level of funds raised, is quite significant… That shows that there is great confidence in the capital markets,” Bowe said. “This demonstrates that international bondholders certainly do see The Bahamas as being capable of repaying its debt.”
However, Bowe questioned the decision to proceed with the transaction now, given global interest rates remain elevated and none of the targeted bonds were due before 2028.
“Why would we seek to do this refinancing today when there’s an expectation of at least a 50-50 percent chance of recession in the United States?” he asked. “If the government is confident in maintaining its creditworthiness or improving it, then why the urgency?”
He also pointed out that the interest rate on the new bond—8.25 percent—is higher than the coupons on the bonds being replaced, which ranged from 6 to 7.125 percent.
“The interest cost… is at best about even,” Bowe said. “If anything, it may even be worse because we had four of the five instruments we repurchased under the current interest rate that we are offering on this new bond.”
Bowe said the deal’s benefits would have been clearer if the government had explicitly framed the transaction as a move to extend maturity rather than reduce borrowing costs.
“If it is that we are trying to extend the term, then I would say, okay, I understand what you’re doing,” he added. “But we were not under pressure that we had a billion dollars coming due next year.”
He further questioned the pricing strategy used in the bond repurchase offers, suggesting the rationale for some of the discounts and premiums was unclear.
The transaction forms part of a broader external financing strategy, following a $500 million international loan backed by a $200 million Inter-American Development Bank guarantee and a $300 million Debt Conversion Project for Marine Conservation concluded in late 2024.
