Aug 2010 Financial News

Government savings bonds up for sale this week

Aug 30, 2010

LOCAL investors will have another chance to buy into an issue of Government Savings Bonds which will go on the market from Wednesday.

Government is seeking to raise $20 million from the issue which carries an interest rate of 5.10 per cent, according to the Central Bank of Barbados (CBB).

The bonds will be issued on a discounted basis and will be priced at $79.68 per $100.

In recent weeks, Government has been very successful in attracting investors to its long-term issues given the increasing liquidity in the financial system, low deposit interest rates prevailing at commercial banks and a slowdown in investing in shares on the Barbados Stock Exchange.
The minimum deposit rate at commercial banks is about 2.5 per cent.

When he last met with the media to review the economy for the half year, Dr. Delisle Worrell, Governor of the CBB, revealed that the banking system was very liquid with cash reserves at the equivalent of 7.5 per cent of deposits, 2.5 percentage points above Central Bank requirements. Treasury Bill rate was 3.2 per cent at June, 2010, down from 3.9 per cent a year earlier.

The last issue of Treasury Notes seeking to raise $50 million was fully subscribed by the investing community. That issue, which carries an interest rate of over seven per cent, will mature in 20 years.

Dr. Worrell had also said that while bank deposits rose marginally, credit demand remained weak.

There continues to be a fair amount of shares available for purchase across a wide section of companies. Up to last week, estimates suggest a combined total of under 300 000 shares were being offered in several stocks.

In the Estimates of Revenue and Expenditure for fiscal 2010/2011, Government said it would be looking to raise just under $700 million from the local capital market to assist in financing the shortfall between revenue and expenditure.

That shortfall was estimated at over one billion dollars. Some $640 million is being earmarked from debentures, $20 million from government bonds and a further $25 million from treasury bills. (JB)


Source:
Barbados Advocate
Monday August 30, 3010

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=12411