Govt Told: Boost Debt Transparency Via Bisx


Tribune Business Editor


BISX's chief executive yesterday said the Government needs to list its $3 billion-plus local debt on the exchange "sooner rather than later" to boost financial transparency.

Keith Davies told Tribune Business that the Bahamas International Securities Exchange (BISX) provided a ready-made platform through which the Government could meet the demand for more openness in its financial dealings.

Suggesting that the listing and trading of Bahamas Government Registered Stock (BGRS) on BISX would "heighten" the Government's standing locally and internationally, Mr Davies said the exchange could also facilitate the Minnis administration's privatisation plans.

The Prime Minister confirmed during the recent Budget debate the Government's intention to sell-off its majority interest in Aliv, the new mobile operator, and a 9 per cent stake in the Bahamas Telecommunications Company (BTC).

Backing these plans as "sound policy", Mr Davies said BISX would provide "a value-added avenue" to assist the Government with raising capital and spreading the wealth among Bahamian investors.

BISX is already home to 15 domestic Government debt tranches, which were listed and placed during the Christie administration's time in office. However, the Bahamas Government Stock (BGS) programme was suspended almost as swiftly as it had begun, with responsibility for managing and issuing government debt returned to the Central Bank.

Conceding that the Minnis administration's intentions are currently unknown, Mr Davies told Tribune Business: "The Government of the Bahamas has been urged by the Chamber of Commerce, and any number of professionals, that it needs to become more transparent in its finances.

"The way to achieve that is by listing and trading those securities on the exchange. That's our position, it needs to happen sooner rather than later.

'It does nothing to diminish the Government, and heightens their standing locally and internationally. We're ready, willing and able to do it. We're trading government securities and corporate debt today. It's not an issue of capacity. We're happy to get involved with that."

Successive administrations, though, have been reluctant to hand over issuance, pricing and trading of their BGRS issues to BISX's market-based mechanisms. The then-Ingraham's failure to follow through on promises to list government debt was one of the factors behind the stock exchange's early financial struggles.

BISX had also 'ramped up' its initial business in anticipation of the Bahamas Telecommunications Company's (BTC) privatisation, which took another 11 long years to complete and remains the only sell-off of a state-owned asset to-date in the Bahamas.

Mr Davies said BISX was willing to assist on this aspect of the Minnis administration's agenda, emphasising that the listing of securities in privatised companies would broaden and deepen the Bahamian capital markets by increasing investment options.

"Government, when BISX started, was talking about privatisation and getting out of the business of owning companies," he told Tribune Business. "It's a sound policy, and ought to happen in a controlled fashion.

"There are positive signs coming out of the Government, indicating its desire to lead. They have mentioned offerings of Aliv and BTC. I'd be interested to hear what they're planning, and will help to ensure their success."

K P Turnquest, minister of finance, in the recent Budget debate said state-owned enterprises (SOEs) will suck up $429 million in taxpayer subsidies during the 2017-2018 Budget year. Describing this as unacceptable, he said the Government would explore privatisation and running these entities more efficiently as solutions for easing the burden on Bahamians.

Mr Davies said the listing of privatised companies on BISX would also help to create, and spread, wealth and ownership of key economic assets among Bahamians.

"There is no better way to achieve that than by listing securities and having them traded on the exchange," he added. "This is a value-added avenue we believe we can put in place to achieve the necessary goals in this day and age.

"There's the Government side, the investment side and the investor side. We have a national stock exchange. It's prepared, tested and has shown it can work. It's just a small market, and we need to diversify investment opportunities for Bahamians and put a lot out there for people to access."

Mr Davies, meanwhile, said BISX anticipated that investment funds - as opposed to main Board listings and initial public offerings (IPOs) - would likely be the exchange's main source of listings for the foreseeable future.

"That's what we forecasted a year ago for the next two-three years. That still seems to be the case," he revealed.

Mr Davies added that capital-raising trends had evolved from large-value public listings to persons seeking smaller sums, via private equity-type and investment pool fund-raisings, for the short and medium-term.

Preference shares and corporate debt, such as bonds, are now the preferred securities rather than equities.


TheMadHatter 11 months, 2 weeks ago

"explore privatization"????? of BISX? Mr. Turnquest you have had 5 years to explore. Are you guys just figuring out what you want to do to fix the Bahamas? Do you plan to take 5 years and then 4 1/2 years from now tell us your "plans" if you win government?

Please get all your board members appointed and department heads etc. so the government can start getting to work.


John 11 months, 1 week ago

A purely weak attempt by Keith Davies to expand his order books. Transparency in borrowing has never been an issue with government. Bahamians already have the opportunity to buy government debt.


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