Dec 2006 Financial News

$700m bond issue sold out

Dec 07, 2006

THE overwhelming response to Government's $700 million bond issue is a good signal that the authorities will mop up excess liquidity and bring down inflation in this fiscal year.

Current inflation is at a 12-year high of 10 per cent.

This from deputy Central Bank governor Joan John, who shared the results of the bond issue with members of the media at the bank's headquarters yesterday.

John said the bond issue, which was put up for auction at the end of last month, was completely sold out and received a collective total of $1.1 billion in bids.

However, only $700 million was available and awarded in the automated, single-price auction system (everyone paid the same price for the bonds).

She added that there were 230 successful bids, of these 188 were from individuals, the others were institutions.

"The Central Bank is still getting calls to buy the bonds," John said.

The biggest single purchase of bonds was for $200 million, which was bought by a large institutional investor, which remained unnamed by the deputy governor.

The bonds will have an eight-year tenure at an 8.15 per cent yield.

Alister Noel, senior manager, operations, Central Bank, said that the response to the issue at 8.15 per cent yield with a current rate of 10 per cent inflation shows that the public and investors have confidence that inflation will go down.

This bond was issued to absorb liquidity from the system and is working together with other measures such as open market operations and it will also assist in making the repo rate measure more effective, John said.

She added that the Government and the Central Bank's goal is to bring inflation down to seven per cent this fiscal year and five per cent in 2008.

Source:
The Trinidad Express
Thursday 7, December 2006

http://www.trinidadexpress.com/index.pl/article_business?id=161063389