Bonds performing well
MINISTER in the Ministry of Finance Ryan Straughn says that new debt instruments issued by Government have been performing extraordinarily, trading at 98 cents on
the dollar in the market.
His comments came in the Lower Chamber yesterday afternoon during a supplementary to pay for legal services utilised during the debt restructuring process.
The Member of Parliament for Christ Church East Central said: “Something extraordinary has happened since we launched the external debt restructuring. It was completed in full in December. We issued the new debts you are aware. We also received a credit upgrade in the December from the ratings agency Standard & Poors, which reflected some of the hard work that not only the Government of Barbados but certainly the legal advisors and the debt advisors would have put in.”
“But since the new debt instruments have been issued, typically what would happen is when there is a credit event of this nature, the bonds typically tend to trade pretty low, upon re-issuing. And something quite extraordinary, where last I checked our bonds were trading at about 98 cents on the dollar. Typically you would see a significant reduction as new bonds are issued after a credit event – that people start to sell off. And therefore you would see a lower valuation in the trading of the bonds.”
“One can only speculate about these things but through our engagement with the creditors, our continued performance in being able to create an environment where not just the credit upgrade was issued, but certainly that the government continues to work hard to meet the targets under the Barbados Economic Recovery and Transformation programme.”
Minister Straughn said that the confidence that the creditors have is being demonstrated, in the fact that there has been the trading of those bonds, remaining relatively high in the context of what normally would take place when sovereign debt restructurings take place.
“It speaks to in part, that this government has committed itself to engaging in the widest possible way to create an understanding that confidence is built on trust and that the Government of Barbados has set about a programme of recovery that would allow us to in a sense restore the credibility and the good name of the Government of Barbados not just in domestic circles by simply paying people when they provide goods and services to the Government of Barbados, by repaying those tax refunds that many thousands of Barbadians were not paid over the ten years.”
“We have done that and will continue to do that. But by creating an environment where the management of our public finances, as we go in, we are now in the second year of the BERT programme, that we continue to demonstrate that through the way that we do business, the way that we administer the public finances will lend confidence into the market,” he said. (JH)