Gov’t loan deal settled

Opposition party wants more detail

After months of behind-the-scenes wrangling, it appears the matter of Cayman Islands government financing has been settled.

In a statement released Wednesday, the Ministry of Finance announced the award of a long-term financing deal for the government to First Caribbean International Bank (Cayman) Ltd.

The financial arrangement is in respect of government’s 2010/11 fiscal year and is for US$185 million in borrowing through 30 June.

The United Kingdom has not allowed the Cayman Islands to make any new borrowings for the next two fiscal years, those being the 2011/12 financial year and 2012/13 year. The interest rate for the 15-year commercial bank loan will be established at the time the funds are withdrawn by government and the rate will be fixed for the duration of the loan.

Premier McKeeva Bush, who is also minister of finance, said the Central Tenders Committee fully reviewed loan options.

“I have been informed of the outcome of the tendering process and from the information presented to me after the decision was confirmed by the Central Tenders Committee, I am satisfied that the government went through this process,” Premier Bush said. “Cost minimisation is paramount to my 
government and me.”

Mr. Bush said the bids submitted for the loan were “extremely competitive”.

Central Tenders Committee Chairman Ronnie Dunn was not available for comment at press time Thursday.

Opposition party members said they wanted a lot more information about this loan arrangement, as well as a previous deal for temporary financing that Opposition Leader Alden McLaughlin called “unconventional”.

“Not many details here have been disclosed,” Mr. McLaughlin said, “except for the amount of money, despite [Premier] McKeeva Bush’s utterances that they [referring to the government] didn’t need all that money.

“One wonders if this deal now is that much better than the one CTC made last year,” he said, referring to a prior financing arrangement that involved two locally-operating banks that was eventually set aside by the ruling government in favour of a deal with a New York-based firm.

Government received two temporary loans that were arranged through the New York firm earlier in the year.

One loan of US$92.5 million was arranged via Cohen & Company Capital Markets LLC with the funding provided jointly through two banks – one in the Cayman Islands and another which is Caribbean-based.

The second loan, also arranged through Cohen, was for US$36 million and was provided by a European bank.

Government paid back the smaller loan through “cash and revenue sources”, according to a statement received from the Ministry of Finance in response to questions.

The US$92.5 million loan, due to be repaid this month, will be paid off out of the proceeds of the newly awarded loan, ministry officials said.

“These temporary loans were needed regardless of which entity was chosen to do a bond issue,” according to a Ministry of Finance statement issued in February. “In fact, the bid documentation…that was issued made it clear that a ‘bridge/temporary loan’ was required for all bidders.”

The New York firm Cohen and Company was paid fees for arranging the temporary loans, but those fees have not been revealed.

“The government is willing to provide details in respect of the payment fees to Cohen & Company once a point in time is reached when such disclosure will not prejudice future fee levels/rates which financiers will request from government.,” according to the earlier statement from the ministry.

Mr. McLaughlin said the government should also provide details of any interest payments made on the temporary loans that were financed through Cohen & Company.

“What was the overall cost of that short term financing?” Mr. McLaughlin said. “The country is owed an explanation about this matter.”

The Cayman Islands still has authorisation from the UK and Legislative Assembly to borrow up to US $185 million through 30 June.