Jul 2016 Financial News

German bank to manage T&T's US$1 bill bond issue

Jul 25, 2016

The Ministry of Finance has chosen Germany’s largest bank to arrange an international roadshow to pique the interest of US and UK fixed-income investors in the Government’s US$1 billion ($6.7 billion), ten-year, fixed-rate bond.

The bond is due to be priced on Thursday.

The price of the bond—the amount of interest it will pay twice a year for ten years—is expected to be between 4.40 per cent and 4.95 per cent, according to several local investment bankers who spoke to the Guardian yesterday on the basis of anonymity.

The fixed-income investor meetings will begin on Monday in Los Angeles and London. Further meetings will take place in New York and London on Tuesday and New York and Boston on Wednesday, Reuters reported yesterday.

The term sheet for the bond, which was made available to the Guardian, disclosed that the sole bookrunner for the issue is Deutsche Bank Securities, while the joint lead managers are Deutsche Bank and majority state-owned First Citizens Bank.

Deutsche Bank, a global bank based in Frankfurt, is generally not well known in the Caribbean, but an investment banker recalled yesterday that the bank was the lead arranger of a US$250 million bond for the Barbados government that failed to place in October 2013.

In a statement yesterday, the Ministry of Finance said that the proceeds of the bond issue “is required to facilitate Government’s development programme, among other things.”

The term sheet indicates, however, that the proceeds “will be used for budgetary purposes.”

Having raised $3.1 billion in two TT-dollar bonds in May and June, the Government needs $6.7 billion, the amount to be raised by the bond, to complete the financing for the 2016 budget deficit, estimated to be $9.8 billion.

The bond has generated a great deal of interest because of the dearth of high-quality, US-dollar fixed income instruments and the slippage in the exchange rate since the beginning of 2016.

The term sheet indicates that the bond will be sold on the international market in denominations of US$200,000. It could not be established yesterday if local financial institutions would be offering the bond in smaller tranches.

In its statement, the Ministry of Finance said Minister Colm Imbert, will head a local delegation to the US on a roadshow, during the week starting Monday.

The delegation includes senior officials, advisers and technocrats from the Ministry of Finance and the Central Bank of Trinidad and Tobago, among others.

“The goal of the roadshow is to promote the Republic of Trinidad and Tobago as a viable investment destination, as well as to encourage the widest possible investor interest and participation in the bond,” said the Ministry of Finance.

During the week, the Minister of Finance and his delegation will meet with, and make presentations to, as many as 20 major banks, investors and financial institutions.

The statement said that in order to cover the widest cross-section of investors, and to achieve the most favourable results, the roadshow has been divided into two legs with different teams covering each leg.

The last time the Government attempted to raise money on the international capital market was in December 2013, when the ten-year, US$500 million bond was oversubscribed, offered at an interest rate of 4.375 per cent and upsized to US$550 million.

Source:
Trinidad Guardian
Saturday July 23, 2016

http://www.guardian.co.tt/business/2016-07-23/german-bank-manage-tt%E2%80%99s-us1-bill-bond-issue