The Cayman Islands government appears to have secured a good deal on the open markets to re-finance its debt. The launch of a $312 million, 10-year bond offer today, Thursday 19 November, has, according to reports, yielded 5.95%. The yield on the notes, which will be listed in The Cayman Islands and London, came in tighter than the guidance given on Wednesday of 6% to 6.125%. HSBC is the sole book-runner on the deal and CNS understands that the issue was oversubscribed and is the tightest deal that a Caribbean country has ever achieved. The debt was a combination of various government borrowings that were due to be paid at the end of this year.
The announcement of government’s intention to issue the bond was made in the Legislative Assembly yesterday by Premier McKeeva Bush when he brought a motion to facilitate the issue. He said government had made the decision to issue the bond on the open markets because of the size of the debt and based on advice that suggested the CIG would be likely to get a wider reach and a better interest rate, which turned out to be the case.
Bush said at the time that he could not elaborate on the details as the terms had not been set and the government would not know the final terms until the bond was issued.
According to the final term sheet, the bond interest will be payable semi-annually in arrears in May and November the first interest payment will be due on 24 May 2010. The issue which is Cayman’s first international sale of government bonds has reportedly been taken up by a wide distribution of buyers from North America, Europe, Asia and the Middle East.
The offer comes on the heels of other offers from the Caribbean and Central America this week. The Bahamas raised $300 million through a 20-year bond yielding 7%, while Panama priced $1 billion in 10-year notes with a 5.224% yield. According to reports on Bloomberg, a number of governments from the emerging markets have been or are planning first-time debt offerings to take advantage of what it described as the biggest bond rally in at least 11 years.