NASSAU, BAHAMAS — Opposition shadow minister for Finance Chester Cooper yesterday said there is nothing to celebrate about the latest international bond placement, particularly its “outrageous interest rate”.
“The $600 million bond has an unprecedented interest rate of 8.95 percent attached, which means taxpayers will have to fork over more than $50 million a year to service the interest on the debt,” Cooper said.
“During the budget debate in June, I advised the governing side that they should have borrowed one to two billion dollars when I suggested, in April, when money was cheap.
“I advised that if the crisis turned out to be shorter than expected that the funds could be used to pay off high-interest debt.”
The Ministry of Finance announced this week it was able to secure US$600 million in bond financing from international capital markets to help finance its 2020/2021 budgetary needs and repay debt.
The transaction will add an additional $352 million to the debt level of the country and falls within the $1.334 billion in approved financing for the current fiscal year.
The MOF said the new transaction benefited from the momentum created during a successful virtual investor roadshow that The Bahamas conducted on October 5 and 6, 2020, at which time the Government met with over 45 global investors.
Gowon Bowe, the Fidelity Group’s chief executive told Eyewitness News that he thinks the government could have gotten a better rate with a “stronger sales pitch”.
In his statement, Cooper called the financing deal a “glaring failure”.
Cooper continued: “Had they gone to market in April, they would have gotten a likely rate of six percent. Since then the downgrades and the perception of The Bahamas being in a debt crisis has made matters worse.
“Had they acted swiftly, there would have been a savings of more than $200 million for the taxpayers over the life of the loan. I told them, but their only response was to laugh. Now, the Bahamian people will cry.
He added: “Such glaring failure should be cause for those in leadership to hang their heads in shame, not thump their chests. They must give an account to the Bahamian people for this failure.”