Government is no longer looking at the option of raising debt via a bullet bond.
In response to a parliamentary question by Opposition Leader Roy McTaggart, Finance Minister Chris Saunders said on Wednesday, “The government is not considering the pursuit of a US$400 million bullet bond, nor is it considering executing any other type of bullet bond.”
On 30 Dec. 2021, the Ministry of Finance had solicited bids from financial advisors to consult on a potential 30-year, US$400 million bullet bond issue.
A bullet bond issuer does not need to repay any of the principal value of the debt until the maturity date.
A few days later the information on government’s procurement website was changed to reflect that the ministry had issued a mere request for information based upon which no contract would be awarded.
The opposition criticised the move as rushed, unnecessary and expensive.
Saunders, at the time, said a bullet bond was just one of the options to restructure government’s debt and potentially take advantage of the low interest rate environment.
However, since then, US Federal Reserve interest rate increases have rendered such a refinancing less attractive.
In September 2020, McTaggart, as the then-finance minister, secured a US$403 million line of credit at a rate of 3.25% that expires this month.
Government can decide whether to draw down US$357 million under the facility and convert it into a 15-year loan by 30 June.
In the first quarter of this year, government reported a surplus of $215.7 million for the entire public sector. Based on larger-than-expected financial-services and work-permit revenue, this was $22.2 million higher than budgeted for the period.
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