Local loans back on track

Some US$5 million in government guaranteed loans for local
home mortgages, business development projects and student loan payments is now
back on track after what were described as “undetected errors” caused some
delays the past few months. Premier McKeeva Bush said in March that about $2
million worth of loans through the Cayman Islands Development Bank were “in the
pipeline” for those projects and needed legislative approval before the cash
could be supplied.

Since that time, the total amount of those approved loans
has climbed to $3.9 million, including $1.8 million for small business
development and another $1.8 million for home mortgages.

“The numbers are a testimony to the role the development
bank is playing,” Mr. Bush said, adding that most of the cash from the US$5
million guaranteed loan has already been earmarked for various projects. 

The Legislative Assembly guaranteed two separate loans last
week to help support the funding operations of the development bank. The first
was the US$5 million loan to the bank from First Caribbean, and the second was
a guarantee on a principal loan amount of US$5.8 million to continue the development
bank’s funding stream when the First Caribbean loan is exhausted.

The Cayman Islands Development Bank had a US$6 million bond
facility, which expired on 30 June. Mr. Bush said more than 95 per cent of the
bondholders had agreed to extend the maturity date of the five-year bonds until
30 June, 2015.

The interest rate on the US$5.8 million principal was also
increased, according to the agreement presented to the Legislative

Mr. Bush said there remains more demand for development
bank loans than there is funding available. He said part of the problem is that
the bank can’t source its own funding, and that the law requires it to go to
Legislative Assembly to guarantee borrowings – rather than gaining approval
through Cabinet.

“We could get $50 million if we wanted to go in the
direction I’m talking about,” the premier said.

Since May 2009, Mr. Bush said the government had provided
more than $10 million in assistance to Caymanian businesses, students and
homeowners through the development bank.