Jun 2016 Financial News

Colm's US $B roadshow

Jun 17, 2016

FINANCE Minister Colm Imbert yesterday said Government successfully raised $3 billion on the domestic market as he also disclosed he will be spearheading a roadshow by his ministry in the United States in July, seeking to raise a further US$1 billion on the international market.

As he spoke at the post-Cabinet news conference at the Office of the Prime Minister in St Clair, Imbert reiterated Government has no plan at this time to make any further withdrawals from the Heritage and Stabilisation Fund (HSF).

“We don’t borrow from the IMF (International Monetary Fund).

You borrow from the IMF when you gone through. TT has not gone through,” Imbert said.

He added that Government’s ability to raise $3 billion on the domestic market and international ratings agencies still giving this country good investment grade ratings, show the confidence is there in the Government.

He explained that in February, Cabinet approved a $3 billion bond issue on the domestic market to finance the estimated $7 billion deficit in the 2016 Budget. As he reiterated that this deficit would be funded through a combination of borrowings and drawdown from the HSF, Imbert indicated the first $1 billion, “was settled in May when the Central Bank conducted an auction system whereby we went to the market and asked for financial institutions to indicate how much of the $1 billion they wished to participate in.” In this particular auction, Imbert said total bids received amounted to $1.88 billion, “which gave us some confidence because it indicated local financial institutions still had an appetite for government debt.” For the remaining $2 billion, Imbert said this was done by a request for proposals system. “At the end of the evaluation procedure, the Cabinet has decided to award the bond for $2 billion at a rate of 4.5 percent.” This was awarded to a single bidder, he said.

Having concluded borrowing on the domestic market for 2016, Imbert said, “The next set of financing that Government is going to do is we are going to the international market.” He indicated that in May, Cabinet approved his ministry’s recommendation for a roadshow to raise US$1 billion on the international market. The minister explained this will help to finance the country not just for the remainder of the 2016 fiscal year but also, “this will take us forward into 2017.” He identified Boston, Chicago, New York and possibly Los Angeles as some cities in the US which the roadshow will visit.

Imbert said the value of going overseas, “is that you get US dollars which are added to our foreign reserves when they come in and you will be paying back over a period of years.” He said this meant “US$1 billion will go immediately to enhancing our country’s foreign reserves and then we may pay back $80 million...$100 million over a period of ten to 12 years.” Reiterating that $2.5 billion or US$375 million was withdrawn from the HSF and not US$2.5 billion as some commentators alleged, Imbert said this is well below the $4.5 billion which Government is legally allowed to withdraw from the fund. “At this time, it is not our intention to withdraw the balance, the additional US$300 million that is still available to the Government by law,” he added.

Source:
By Clint Chan Tack
Newsday
Friday June 17, 2016

http://www.newsday.co.tt/news/0,229319.html