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Saturday, October 21 2017 @ 05:30 PM AST

US$550 million bond will drive up Trinidad & Tobago's external debt

The US$550 million bond that the government of Trinidad & Tobago placed on international capital markets on Wednesday evening will drive up this country's external debt, a leading economist has said.

"Domestic debt is roughly $26 billion whereas external debt is less than half that much, at $11 billion equivalent. Domestic debt has been rising steadily, while external debt has been fairly stable for some time," RBC Caribbean Group Economist Marla Dukharan had said on the morning before government listed the bonds. In an e-mail reply to a query, she said: "The government is about to (today or tomorrow) issue a US$500 million bond, which will drive up the external debt component. These figures account for central government debt only, and do not include the debts of state enterprises/contingent liabilities which are also guaranteed by the central government."

The US$550 million bond was announced on Bloomberg in New York on Wednesday (Dec 11) at around 6 pm. Citigroup is managing the bond sale. The bonds were listed as a "private placement" and will not be managed by the Central Bank of T&T.

The US$550 million 10-year bonds came out initially with a 4.375 per cent coupon.

The 10-year bonds' maturity date is January 16, 2024.

In a statement dated December 6, T&T's Ministry of Finance and the Economy said: "This is not the first occasion that the Republic of T&T has accessed the international markets and the Republic currently has two outstanding international bonds: a US$250 million bond due 2020, and a US$150 million bond due 2027."

The statement said the 10-year bond will finance one year of government operations: 2014

The Ministry of Finance and the Economy said it considered "it prudent at this time to raise funds in the international market since current market conditions present the government with a timely opportunity to access the international debt market, where low United States Treasuries and yields presents potentially attractive financing opportunities for emerging markets."

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