$250 Million Barbadian Gov’t Debenture Issue Hits the Market

  • Having successfully secured a $600Mn loan from a consortium of local commercial banks, the Barbados government is seeking to tap into the increasing confidence in its debt instruments since the 2018-2019 debt restructuring exercise. Over the weekend, the Central Bank of Barbados announced it was offering a $250Mn Government of Barbados 20-year Debenture issue.
  • The issuance has a grace period of 10 years, followed by 10 years of equal quarterly payments to be made in February, May, August and November.  A total of 40 payments will be made until 2044. The interest rate on this long-term debt instrument is 7.75% and the government is offering it to the public for minimum purchases of $1000.  According to the Central Bank of Barbados, the issue will remain open until the bank advises that it has been fully subscribed.
  • The Debenture1 represents a shifting focus by the Barbados government back to raising capital on the local market. In his mid-year report to the country, Minister of State in the Ministry of Finance Ryan Straughn reported that as of September 30, 2024, Barbados’ total public debt stood at $14.87Mn, or 104.8 per cent of GDP. However, he affirmed the government’s commitment to responsible debt management, including timely debt service payments, which totalled $717.8Mn during the first half of the financial year.
  • “Our focus on public sector reform, debt management, and prudent fiscal policies will ensure that Barbados remains on a sustainable fiscal path, whilst continuing to invest in the future of our people and our country,” Straughn said. He highlighted restrained government expenditure, which stood at $1.70Bn, falling short of the forecasted $1.763Bn.
  • According to Straughn, the restrained expenditure was mainly due to delays in capital project execution for road repairs and housing developments. Parliament recently approved a $600Mn loan from three local commercial banks as it pursues a debt swap, where it repays higher interest loans with a new loan at a lower interest rate. The loan is being financed by CIBC, Royal Bank and ScotiaBank. CIBC is structuring the 20-year loan.  

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1Debentures are a type of loan that is not backed by collateral, but instead by the reputation and creditworthiness of the issuer.

(Source: Barbados Today)