Aug 29, 2022

The Opposition notes that the Bahamas bonds continue to trade well below their par value as has been acknowledged by the government’s own hired experts in the field. We recall that upon coming into office, the Prime Minister back in October 2021 said in his contribution to the supplementary budget that then bond price performance was due to what he termed poor fiscal management which led to weakened investor confidence.

At the time of his comments in October of last year, the Bahamas bond series 20/32 was trading at over 90 cents on the dollar. As of today, August 24th, those bonds are trading at 63 cents on the dollar. Between his speech and now, the value of those bonds have fallen by more than one third and is trading at distressed levels. In other words, despite his critique of the FNM government, all of the reckless fiscal actions of the Davis administration has only made the situation worse. As we have said before, the PLP need to put down its incessant PR campaigns and photo-ops and get to the business of serious governance.

The FNM also recognizes though that there is an opportunity with these heavily discounted bonds to allow more Bahamians to purchase these bonds and take advantage of the 9 percent plus returns on the bonds. This will require the government to work with the Central Bank to perhaps create a special window to facilitate for ordinary Bahamians. But our understanding is that right now only a select number of sophisticated and wealthy Bahamians have access to these bonds.

The FNM however believes that should be extended to ordinary Bahamians. This will allow

the government to bring more of its foreign debt holdings onshore and allow ordinary Bahamians to participate and generate decent returns over the little or no interest being offered by most commercial banks. The government can work with the central bank to set a cap on the overall quantum of these purchases so that there is no risk to the country’s now very healthy foreign exchange holdings.

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