At a news con­fer­ence on No­vem­ber 1, Min­is­ter of Fi­nance, Colm Im­bert, said the Min­istry of Fi­nance was work­ing on for­mal­is­ing and fi­nal­is­ing NIF (Na­tion­al In­vest­ment Fund) 2 with­in the next two months, which would be by the end of 2023.

The orig­i­nal NIF bonds, first is­sued in 2018, had a face val­ue of $4 bil­lion, of­fered fixed-in­ter­est re­turns, and were backed by five as­sets worth about $8 bil­lion.

These as­sets com­prised the 100 per cent state-owned elec­tric­i­ty gen­er­a­tion com­pa­ny, TGU, and as­sets ac­quired from Cli­co and Cli­co In­vest­ment Bank (in liq­ui­da­tion) as a re­sult of the bailout of the CL Fi­nan­cial group in 2009.

The num­ber of shares held by NIF, their val­ue in Ju­ly 2018 and their con­tri­bu­tion to the Fund were:

1) 42,475,362 shares in Re­pub­lic Fi­nan­cial Hold­ings Ltd (RFHL) worth $4.31 bil­lion, ac­count­ing for 55 per cent of NIF’s port­fo­lios;

2) 189,400,000 shares in Trinidad Gen­er­a­tion Un­lim­it­ed (TGU) worth $2.02 bil­lion, ac­count­ing for 26 per cent of the Fund’s hold­ings;

3) 61,677,011 shares in An­gos­tu­ra Hold­ings Ltd worth $969.56 mil­lion, ac­count­ing for 12 per cent of NIF;

4) 4,548,712 shares in Wit­co worth $406.60 mil­lion, ac­count­ing for 5 per cent of NIF;

5) 15,285,917 shares in One Caribbean Me­dia worth $189.54 mil­lion, ac­count­ing for two per cent of the Fund.
Those five as­sets had a to­tal val­ue of $7.89 bil­lion in Ju­ly 2018.
Al­so, the NIF bonds were is­sued to sub­scribers in Au­gust 2018 in three se­ries:

• Se­ries A—$1.2 bil­lion with a tenor of 5 years at a fixed rate of 4.5 per cent;

• Se­ries B—$1.6 bil­lion to TT $2.0 bil­lion with a tenor of 12 years at a fixed rate of 5.7 per cent; and

• Se­ries C—$800 mil­lion to $1.2 bil­lion with a tenor of 20 years at a fixed rate of 6.6 per cent.

Ad­dress­ing sup­port­ers of the rul­ing Peo­ple’s Na­tion­al Move­ment at the Up­per Mal­abar Com­mu­ni­ty Cen­tre in Ari­ma on Au­gust 18, 2018, the Fi­nance Min­is­ter re­vealed that the fi­nal tal­ly of the to­tal NIF bond sub­scrip­tion was $7.3 bil­lion.

“The to­tal is $7.3 bil­lion, 82 per cent over­sub­scribed. For the five-year bond, where we were look­ing for about $800 mil­lion, the ap­pli­ca­tions are $2.1 bil­lion. In the 12-year bond, we were look­ing at be­tween $800 mil­lion and $1.2 bil­lion, the ap­pli­ca­tions are $1.6 bil­lion. But the shock­er was the 20-year bond, be­cause re­mem­ber if some­body is in­vest­ing in some­thing for 20 years, it means you have tremen­dous con­fi­dence in the as­set and the in­stru­ment. We were look­ing for some­where be­tween $800 mil­lion and $1.2 bil­lion, we got $3.5 bil­lion, in the 20-year (se­ries),” he told the Ari­ma au­di­ence.

Pre­sent­ing the 2019 bud­get, on Oc­to­ber 1, 2018, Mr Im­bert said the NIF bond is­suance re­ceived 8,103 ap­pli­ca­tions val­ued at $7.349 bil­lion.

Speak­ing at the vir­tu­al news con­fer­ence a month ago, Mr Im­bert in­di­cat­ed that the Min­istry of Fi­nance was lean­ing in the di­rec­tion of mak­ing NIF 2 a five-year bond be­cause, in the first in­car­na­tion of the in­vest­ment, that one was more at­trac­tive to peo­ple on the low­er end of the in­come pyra­mid.

“In fact, I signed off on that just a week ago, but I don’t tell tales out of school. That will be­come known very soon. We are fo­cus­ing on the NIF 2 so that it will tar­get again that group of in­di­vid­u­als from the per­son with the small­est amount of mon­ey to medi­um-size in­di­vid­u­als.

“It is be­ing de­signed for that; it will be a very at­trac­tive in­ter­est rate, and it will have a tenor of five years and I ex­pect you to for­malise and fi­nalise all of this with­in the next two months,” said Im­bert.

“The 20-year bond was picked up most­ly by in­sti­tu­tions like in­sur­ance com­pa­nies and so on, while the 12-year bond was picked up by wealthy in­di­vid­u­als. The five-year bond was picked up by your or­di­nary in­vestor,” he said.

Is a five-year bond

on­ly a good idea?

It is good that the Min­is­ter of Fi­nance is look­ing out for those in our so­ci­ety of mod­est means or, as he put it, “the per­son with the small­est amount of mon­ey to medi­um-sized in­di­vid­u­als.”

But, in re­al­i­ty, a big part of the suc­cess of the NIF was the fact that it tar­get­ted every­body in the coun­try, from small in­vestors to bil­lion­aires.

In­tro­duc­ing an in­vest­ment that specif­i­cal­ly tar­gets “the small man,” would pos­si­bly lim­it the suc­cess of NIF 2.

Sec­ond­ly, the Min­is­ter of Fi­nance should be con­scious of the fact that he has said re­peat­ed­ly that the Gov­ern­ment is do­ing every­thing in its pow­er to en­sure that the 37,000 pub­lic sec­tor work­ers re­ceive their $1 bil­lion in back­pay by Christ­mas.

Those work­ers ac­cept­ed the four per cent wage of­fer plus in­creas­es in some al­lowances.

From a pub­lic fi­nance per­spec­tive, it would be quite ap­pro­pri­ate if those 37,000 pub­lic sec­tor work­ers could use some or all of their back­pay in­vest­ing in a safe, high-in­ter­est-pay­ing bond

Third­ly, every year there are thou­sands of peo­ple who are ap­proach­ing re­tire­ment who are look­ing around T&T’s cap­i­tal mar­ket for in­vest­ments that would give them a good re­turn in their gold­en years.

Hy­po­thet­i­cal­ly, if the Min­istry of Fi­nance brings NIF 2 with a five-year bond pay­ing 5.5 per cent, that would be less at­trac­tive to re­tirees than a 12-year bond pay­ing 6.7 per cent.

Fourth­ly, as part of its pub­lic pol­i­cy, the Min­istry of Fi­nance should be ac­tive­ly look­ing to fa­cil­i­tate the repa­tri­a­tion of for­eign ex­change.

There­fore, con­sid­er­a­tion should be giv­en to mak­ing part of NIF 2 a long-term (12 or 20 years) US-dol­lar se­ries that would be at­trac­tive to those hold­ing bil­lions of US dol­lars in ac­counts, both on­shore and off­shore.

A US-dol­lar tranche would be es­pe­cial­ly ap­pro­pri­ate if the Min­istry of Fi­nance has been able to re­solve the is­sues with petro­chem­i­cal gi­ant, Pro­man, sur­round­ing the trans­fer of shares in Methanol Hold­ings In­ter­na­tion­al Ltd to Cor­po­ra­tion Sole and NIF.

The fund on Feb­ru­ary 21, 2023, ac­cept­ed an of­fer from Cli­co to ac­quire the 17 per cent share­hold­ing in MHIL that Cli­co of­fered for sale.

i) The bond of­fer was heav­i­ly over­sub­scribed be­cause it came at a time when in­ter­est rates of­fered by de­posit-tak­ing in­sti­tu­tions were low. Peo­ple then, and now, were look­ing for re­turns on their in­vest­ments that were high­er than they re­ceived from fixed de­posits;

ii) NIF com­pris­es high-qual­i­ty as­sets, four out of the five of which are list­ed on the T&T Stock Ex­change. In­vestors were com­fort­ed by the fact that the $7.9 bil­lion val­ue of the shares back­ing the NIF was al­most twice the face val­ue of the bonds is­sued;

iii) The bond se­ries was well-mar­ket­ed by the Min­istry of Fi­nance;

iv) There was, and is, a dearth of new pub­lic of­fer­ings on the lo­cal mar­ket;

v) In­vestors in the five-year bond re­ceived in­ter­est pay­ments twice a year for five years and their ini­tial in­vest­ment as a bul­let pay­ment in Au­gust; and

vi) In­vestors as­sumed that NIF has an im­plic­it Gov­ern­ment guar­an­tee. That is be­cause it was in­cor­po­rat­ed by the Gov­ern­ment, is 100 per cent owned by Cor­po­ra­tion Sole, has its reg­is­tered of­fice on the sec­ond floor of the Min­istry of Fi­nance build­ing and its five di­rec­tors are all of­fi­cers of the Min­istry of Fi­nance.

Will NIF 2 be a re­al­i­ty

in the next month?

No­vem­ber 1 was not the first time that the Min­is­ter of Fi­nance promised NIF 2 and has not been able to de­liv­er it.
Pre­sent­ing the 2019 bud­get on Oc­to­ber 1, 2018, Mr Im­bert said:

“I wish to an­nounce to the na­tion­al com­mu­ni­ty that there will be an­oth­er Na­tion­al In­vest­ment Fund bond of­fered in 2019, sim­i­lar to the 2018 of­fer­ing.”

In the 2020 bud­get, he said: “Madam Speak­er, we will con­tin­ue to use this ve­hi­cle as a mech­a­nism for mon­etis­ing ma­jor state as­sets, in­clud­ing those as­sets trans­ferred to the Gov­ern­ment for re-pay­ment of the cost of the CL Fi­nan­cial/Cli­co bailout.

“Bar­ring un­fore­seen cir­cum­stances, I pro­pose to in­tro­duce in fis­cal 2020 a sec­ond Na­tion­al In­vest­ment Fund Bond is­sue which will be based,
among oth­er things, on the pro­ceeds from the sale of cer­tain shares held by Cli­co that are cur­rent­ly val­ued at $2.6 bil­lion.

“We will main­tain the cur­rent ra­tio of 2:1 re­lat­ing to the as­sets and the cor­po­rate bonds is­sued by the first Na­tion­al In­vest­ment Fund.”