Ryan Hamilton-Davis and Kinnesha George-Harry
The Tobago House of Assembly (THA) recently announced its first bond issue, raising over $164 million. But the most important details of the issue remain a mystery.
In a release dated May 28, the Division of Finance and the Economy said the Executive Council had granted approval in February 2019 for the issuance of bonds. After approval was received from the Minister of Finance, the release said, the Assembly worked with the Finance Ministry and First Citizens bank as the arranger, to ensure all the legal and regulatory requirements were fulfilled.
The release said institutional investors in both islands participated and the first tranche raised $164.175 million with a tenor of six years at a fixed interest rate of 5.2 per cent to be paid semi-annually.
Business Day has tried to get more information on the bonds, including where it's listed and who are the investors, but that information has been difficult to come by.
Also unclear is where the money to pay the interest will come from.
One senior economist Business Day contacted wasn't aware of the issuance at all, while another had only heard of it, but had no additional information.
There were some questions, though, such as who can purchase the bonds? Are they still available? Is the return on the bond worth the investment? What are the liabilities of the bond?
Since its annexation to Trinidad in 1899, Tobago has contributed in one way or another to the national economy.
[caption id="attachment_895534" align="alignnone" width="1024"] In this March file photo construction continues on the Buccoo Bay waterfront boadwalk in Buccoo, Tobago. The Tobago Tourism Agency Limited (TTAL) in conjunction with the Division of Tourism, Culture and Transport (DTCT) have been taking advantage of the border closure to upgrade tourist attractions. - David Reid[/caption]
When the Tobago House of Assembly (THA) was established by Act 37 in 1980, so was the THA fund, which, in a way, linked the two islands’ finances together.
The Act dictated that the Parliament would allocate funds to address the financial and developmental needs of Tobago, and through that fund, Tobago would address all its needs and deposit all its profits, such as proceeds from goods, services and the use of government properties.
Section 50 of the Act stipulated that any excess funds would be split in half, with Tobago using its half to further fund projects for development and the other half surrendered to central government.
In 1996, the Act was amended and section 51 of act 40 allowed Tobago to borrow and invest on behalf of the country.
With more volatile energy prices and the tourism industry grinding to a halt owing to the covid19 pandemic, as indicated in the THA's budget statement for last year and the year before, Tobago now more than ever, has to find ways and means to contribute to TT’s overall GDP as well as garner its own revenue.
The recently announced issuance of THA bonds would, therefore, seem to be a clever use of the
