Nadaleen Singh

The $2 bil­lion bond suc­cess­ful­ly ex­e­cut­ed by Re­pub­lic Bank Lim­it­ed (RBL) at a fixed in­ter­est rate of 4.5 per cent will be lu­cra­tive for in­vestors as they have been able to shift from low­er yield­ing as­sets, says man­ag­ing di­rec­tor Nigel Bap­tiste.

"From an eco­nom­ic per­spec­tive, this bond as­sists gov­ern­ment in meet­ing its ex­pen­di­ture re­quire­ments and re­flects con­tin­ued con­fi­dence in the lo­cal econ­o­my," he told the T&T Guardian

RBL's pro­pos­al was sub­mit­ted on June 1 and the bank was award­ed the man­date by Gov­ern­ment on June 17. The bond was is­sued on June 29, 2016.

Bap­tiste said it is the sin­gle largest ful­ly un­der­writ­ten com­mit­ment for the bank to date and the suc­cess­ful arrange­ment of a bond of that size demon­strates the "strength and ca­pac­i­ty of the bank" in the un­der­writ­ing and flota­tion of the bond is­sue.

Does this mean that RBL now has the fi­nan­cial strength to man­age a bond is­sue of that mag­ni­tude? The unau­dit­ed group fi­nan­cial state­ment for the nine months end­ed June 30, 2016 shows $939.5 mil­lion in net prof­it af­ter tax. This com­pares with $903 mil­lion for the pe­ri­od end­ed June 30, 2015. The bank's to­tal as­sets are val­ued at $68.8 bil­lion com­pared to $62.3 bil­lion in 2015.

RBL is ac­cus­tomed to as­sist­ing Gov­ern­ment through bond flota­tions. Its mer­chant bank sub­sidiary, Fin­cor which be­came Re­pub­lic Fi­nan­cial Hold­ings Lim­it­ed last year, float­ed its first gov­ern­ment bond in 1986 val­ued at more than $200 mil­lion.

Com­ment­ing on the im­pact this bond will have on RBL's bot­tom­line as well as the fi­nan­cial sys­tem, Bap­tiste said there will be a "pos­i­tive" im­pact be­cause it "pro­vides in­vest­ment op­por­tu­ni­ties for the bank as well as for in­sti­tu­tion­al and in­di­vid­ual in­vestors. As part of the nor­mal process in in­vest­ment bank­ing, RBL would have of­fered the bonds to in­vestors with­in the do­mes­tic econ­o­my."

Bap­tiste said the bank, along with oth­er fi­nan­cial in­sti­tu­tions, was in­vit­ed to sub­mit a pro­pos­al to Gov­ern­ment for the ar­rang­ing of the $2 bil­lion bond. This meant that it was com­pet­ing with oth­er in­sti­tu­tions for the award of the man­date.

It was the sec­ond of two lo­cal bond is­sues raised by the Gov­ern­ment in the last two months.

"The first bond for $1 bil­lion was raised via the auc­tion method. This bond was raised via a re­quest for pro­pos­als from var­i­ous fi­nan­cial in­sti­tu­tions. We were the suc­cess­ful bid­der," Bap­tiste ex­plained.

"These two bond is­sues are dis­tinct from the US dol­lar bond for US$1 bil­lion which Gov­ern­ment sought to raise through the US dol­lar mar­ket. When all is com­plet­ed, in to­tal gov­ern­ment would have raised $3 bil­lion and US$1 bil­lion from the lo­cal and in­ter­na­tion­al mar­kets."

He added: "We were very pleased to be able to sup­port the Gov­ern­ment through the suc­cess­ful arrange­ment and place­ment of this bond which we be­lieve will on­ly re­dound to the ben­e­fit of all of the bank's stake­hold­ers and the wider lo­cal econ­o­my."