The Bahamas successfully prices US$600 million Bond Offering

Amidst global market volatility driven by a resurgence of COVID-19 cases globally, as well as increasing uncertainty around the upcoming U.S. elections, the Government of the Commonwealth of The Bahamas was able to take advantage of a positive market window to successfully price a US$600 million issue of 8.95% bonds, due 2032 in the international debt capital markets. This new transaction benefitted from the momentum created during a successful virtual investor roadshow that The Bahamas conducted on October 5 and 6, 2020, at which time the Government met with over 45 global investors. A team from the Ministry of Finance, led by the Deputy Prime Minister & Minister of Finance, and including the Acting Financial Secretary and the Director General of the Ministry of Tourism, presented investors with an update on economic and financial trends in The Bahamas, as well as the Government’s recent policy initiatives for combating the COVID-19 pandemic and plans for reopening of the tourism sector. The orderbook closed with indications in excess of US$1.1 billion, and with over 140 accounts participating—including many new investors in Bahamas debt. The 11-year weighted average life bond was priced with a coupon (interest rate) of 8.950% per annum, payable semi-annually in arrears, with principal amortization payable in three equal annual installments, commencing on October 15, 2030 and a final maturity date of October 15, 2032. The proceeds of the issuance will be used to finance the Government’s general 2020/2021 budgetary needs and to repay its indebtedness of US$248 million under the 2020 Bridge Facility. This transaction will add an additional $352 million to the debt level of the country, and falls within the $1.334 billion in approved financing for the current fiscal year. Commenting on the transaction, the Minister of Finance, the Hon. K. Peter Turnquest, said: “Given the strong shock to the Bahamian economy caused by Hurricane Dorian and now COVID-19, we are satisfied with the successful pricing of this bond issue and the positive response from the investor community, which reflects the market’s ongoing confidence in The Bahamas.” “Despite the interruption in our fiscal consolidation objective, the Government is undeterred in its commitment to pursue a credible fiscal policy and achieve debt sustainability and to pursuing the structural reforms that would release a strong level of economic growth.” This he added, “will improve The Bahamas’ prospects for enhancing its funding cost fundamentals vis-vis the credit markets,” said Minister Turnquest. Consistent with its debt management strategy, the Government intends to establish a sinking fund to assist in managing the future repayment obligations arising from this debt issuance. Credit Suisse Securities (USA) Inc. and RBC Capital Markets, LLC. managed the offer as joint book runners.