BUSINESS MONDAY: Straughn’s secondary market plug
MINISTER in the Ministry of Finance, Ryan Straughn, is urging local institutions not to let opportunities from the secondary market pass them by.
He was speaking in the Lower Chamber on the Debt Holder (Approval of Debt Restructuring) (Validation) Bill 2019 recently, where he made the observation that a number of foreign entities have been engaging in the secondary market for the trading of restructured bonds.
Stressing that there is nothing wrong with this move, he told the Honourable Chamber, “I am saying to our domestic institutions that yes, we had to restructure the domestic debt, but it would be a shame, I believe Sir, that where others see an opportunity, and believe in the Government of Barbados with respect to the BERT plan, that it would be a shame that domestic entities who are so indeed can also take advantage of such opportunities.
“Whilst I could never advise people directly in terms of what to do with their monies, because obviously you have shareholders on boards to report to, the reality is there are people on the outside of Barbados looking at what is happening because this Government took decisive action. Because whether we like it or not, the way that financial markets work, people are always looking for an opportunity to make money.”
He challenged that oftentimes domestically, businesses are slow to respond while foreign entities hone in on what the Government of Barbados is doing.
“...And would have seen what the trajectory for the credit rating, certainly over the last five years, coming down and would have recognised that at some point the Government would have to deal with its debt and that when the Government deals with its debt, there is an opportunity within the secondary market space for financial institutions then to come in.”
He said these entities bring enhanced relief for individual or small companies who might have been impacted and who may need shorter-term financing.
“It is that lack of action on the part of domestic companies, financial companies especially. I would say they need to recognise the opportunity for what it is. Because while we cannot stop people from selling their bonds from whomever, I would rather Sir, that we have active companies domestically engaging in such an opportunity rather than it solely being companies on the outside, recognising that this Government has taken decisive action which is a signal to the market that Barbados is open and ready for business.
“...Whether you are an insurance company, a bank, a credit union ... that there is an opportunity to help create some greater returns for your shareholders or your members or what have you, simply by recognising that there is an opportunity,” he said. (JH)