Aug 2016 Financial News

$2 billion bond raised by RBL

Aug 10, 2016

The $2 billion bond successfully executed by Republic Bank Limited (RBL) at a fixed interest rate of 4.5 per cent will be lucrative for investors as they have been able to shift from lower yielding assets, says managing director Nigel Baptiste.

“From an economic perspective, this bond assists government in meeting its expenditure requirements and reflects continued confidence in the local economy,” he told the T&T Guardian

RBL’s proposal was submitted on June 1 and the bank was awarded the mandate by Government on June 17. The bond was issued on June 29, 2016.

Baptiste said it is the single largest fully underwritten commitment for the bank to date and the successful arrangement of a bond of that size demonstrates the “strength and capacity of the bank” in the underwriting and flotation of the bond issue.

Does this mean that RBL now has the financial strength to manage a bond issue of that magnitude? The unaudited group financial statement for the nine months ended June 30, 2016 shows $939.5 million in net profit after tax. This compares with $903 million for the period ended June 30, 2015. The bank’s total assets are valued at $68.8 billion compared to $62.3 billion in 2015.

RBL is accustomed to assisting Government through bond flotations. Its merchant bank subsidiary, Fincor which became Republic Financial Holdings Limited last year, floated its first government bond in 1986 valued at more than $200 million.

Commenting on the impact this bond will have on RBL’s bottomline as well as the financial system, Baptiste said there will be a “positive” impact because it “provides investment opportunities for the bank as well as for institutional and individual investors. As part of the normal process in investment banking, RBL would have offered the bonds to investors within the domestic economy.”

Baptiste said the bank, along with other financial institutions, was invited to submit a proposal to Government for the arranging of the $2 billion bond. This meant that it was competing with other institutions for the award of the mandate.

It was the second of two local bond issues raised by the Government in the last two months.

“The first bond for $1 billion was raised via the auction method. This bond was raised via a request for proposals from various financial institutions. We were the successful bidder,” Baptiste explained.

“These two bond issues are distinct from the US dollar bond for US$1 billion which Government sought to raise through the US dollar market. When all is completed, in total government would have raised $3 billion and US$1 billion from the local and international markets.”

He added: “We were very pleased to be able to support the Government through the successful arrangement and placement of this bond which we believe will only redound to the benefit of all of the bank’s stakeholders and the wider local economy.”

Source:
Nadaleen Singh
Trinidad Guardian
Wednesday August 10, 2016

http://www.guardian.co.tt/business/2016-08-09/2-billion-bond-raised-rbl