FISCAL YEAR FINISH IS ‘CRITICAL PLATFORM’ FOR 78% DEFICIT CUT

FROM PAGE B3 issued and outstanding foreign currency bonds have also stabilised at just over 7 percent. Mr Wilson said the latter development is “very important” and will “help us a lot”, as credit rating agencies such as Moody’s and Standard & Poor’s focus heavily on sovereign debt costs in the secondary market.

“Debt denominated in foreign currency, at $5.646bn, equated to 45.1 percent of the total debt, declining steadily from the peak 46.2 percent proportion held at end-June 2022,” the debt report said. “Bahamian dollar debt registered a quarterly increase of $144.1m (2.1 percent) to $6.871bn for a leading 54.9 percent of the total compared with 53.8 percent at end- June 2022.

“Quarterly variations in the debt stock were almost equally distributed between debt operations of the central government and the agencies and government business enterprises, which grew by $68.1m (0.6 percent) and $69.5m (5.2 percent), respectively, since end-December 2022.”

As for debt servicing, the report said: “Debt service costs during the review quarter were estimated at $882.9m for an aggregate $2.419bn over the nine months to March 2023. Consistent with the central government’s debt profile, approximately 70.6 percent of the recent quarterly costs represented Bahamian dollar payments, with the balance (29.4 percent) covering foreign currency liabilities.

“Of the $687.1m (78.2 percent) in principal payments, almost 80 percent was in Bahamian dollars. Meanwhile, 62.5 percent of the $190.5m (21.8 percent) in interest payments met foreign currency obligations, and the remaining 37.5 percent was incurred on Bahamian dollar debt.”

While the Government has a significant amount of debt maturing in the short-term, with $1.438bn in domestically-held securities and $109.8m of external repayments due before end-June 2023, Mr Wilson said there was “no concern” over the appetite and willingness of investors to roll this over.

“The debt redemption profile for the balance of fiscal year 2022-2023 and first quarter of fiscal year 2023-2024 reflect reissuances of Treasury bills ($899.5m), Treasury notes ($97.1m) and Central Bank advances ($332.5m). The large increases in external payments for fiscal year 2023-2024 and fiscal year 2028-2029 are central Government’s bond maturities..... for which the Government intends to address through appropriate liability management exercise,” the report said.

“Across the maturity spectrum, the longer maturity and amortising profile of the multilateral and bilateral credits providing some smoothing to the external bond maturity patterns. Domestic redemptions reflect the preponderance of bond issuances, which are typically refinanced upon maturity.”