Finance Minister Colm Imbert has described the National Investment Fund (NIF) bond issue as a “tremendous success” stating that the final tally for bond applications was $7.3 billion.
Imbert said this figure represented an 82 per cent over-subscription of the NIF bond and shows that the population has overwhelming confidence in the People’s National Movement (PNM) Government.
As a result of the success of the NIF, Imbert said a $1.5 billion housing bond will be offered next year.
Imbert made the statements during a PNM political meeting in Malabar on Saturday night.
The NIF bond was issued to raise $4 billion.
It was backed by assets worth $7.9 in the National Investment Fund Holding Company supported mainly by Republic Bank, Angostura and Trinidad Generation Unlimited.
The bonds went on offer from July 12 to August 8.
Notification of allotments will be on August 30 and refunds will be given on September 3.
Imbert said the funds raised by the NIF would be able to bring down the country’s overdraft, which has been hovering in the 90 per cent range over the last month, to around 50 per cent.
“I haven’t seen that for a long time and we will be able to pay some bills,” Imbert said.
Imbert said the $4 billion raised by the NIF bond issue was “absolutely critical” in order to fund the budget. He said the total number of applications received for the NIF bond issue was 8,116.
Imbert said 7,436 was from individuals. He thanked T&T for their response to the bond issue.
The NIF bond was issued in three series, five years, 12 years and 20 years.
He said while all three series were oversubscribed the response to the 20-year series was the “shocker” and showed the “tremendous confidence” people had in the instrument.
The $3.5 billion over-subscription in the NIF showed that the “country is crying out for investment,” he said.
“As such the Government has decided to tap into that spare capacity outside there with housing bonds.
“The purpose of a housing bond is to raise capital to build housing and our housing bonds will be designed in such a way that people who purchase housing bonds will be able to use them to acquire HDC (Housing Development Corporation) housing, public housing and whatever they put toward the bond they put that towards the house. But, in addition, we are going to structure it in such a way that the people who invest in the housing bonds will have a special window into the acquisition into HDC housing,” he said.
“So it will allow people to save so that the housing bonds will also have very attractive interest rates, it allows people to save for a particular purpose, it allows them to use their savings, their bonds to buy a home, which is one of the more important things to families. What the housing bonds will do as well is it will give us the money that we require to kick-start or to continue the housing programme that the HDC is currently engaged in,” Imbert said.
“We are going to float an issue in the order of $1.5 billion in housing bonds so we can get our HDC projects going. We can pay our contractors, we can accelerate the construction of houses and the bonds in due course.
“Initially, we will start with a government guarantee but in due course the mortgage payments, when people purchase the houses and they convert their interest to mortgage loans the proceeds to the mortgage loans will go into a sinking fund to repay the bonds when they become due and these are short-term bonds, three years,” he said.
Imbert said the housing bonds will be even more attractive than the NIF.