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Govt Debt Trading On Bisx Misses Target Start Date

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John Rolle

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday expressed optimism that the trading of central government debt on BISX will begin before year-end despite the initial November deadline being missed.

John Rolle told Tribune Business he was “absolutely” confident this will happen before 2019 closes, saying: “I know that the process is virtually complete. There are just one or two technical questions around the pricing methodology where we’ve committed to share some information.

“From a technical point of view we’ve completed the process, so it’s very close to happening. We will certainly be ready to move in that direction. We don’t anticipate there would be any issues with the relationship with the market in terms of getting started. The intent is that everything would be listed; all bonds would be listed.”

The Bahamas International Securities Exchange’s (BISX) 20-year effort to have more than $3bn in government bonds listed and traded over the exchange moved closer to conclusion earlier this year after itself, the government and Central Bank unveiled a partnership to make this happen by November 2019. However, Tribune Business understands that this deadline is likely to be missed.

Keith Davies, BISX’s chief executive, told this newspaper: “We look forward to receiving whatever information is necessary for us to move ahead. BISX has already upgraded its system, and we are able to provide all the information as required by the Central Bank to proceed. The securities are already listed; it’s the go-ahead to begin trading.

“We are ready, willing and able to begun trading government securities whenever the Central Bank says. We put a platform for government securities on our system from inception for whenever they came on and, now they are here, we have upgraded our system to remove any point of failure. We’re essentially cloud based.”

The BISX listing will provide investors with real time information on the breadth and depth of the government securities market, plus the pricing of different issues, thereby enabling them to make “better informed” investment decisions and boosting transparency.

There will also be spin-off benefits for the wider debt market, as companies will be able to use investors’ risk appetite for government debt as a “benchmark” for pricing their own corporate debt issues thus leading to the development of a Bahamian Yield Curve.

The addition of more than $3bn worth of government bonds, split into over 200 tranches or issues, will increase the total value of debt listed on BISX more than six-fold compared to the $513m present at the end of the 2019 first quarter.

Adding in $4.853bn worth of listed equities, the arrival of the BGRS issues will increase the total value of all BISX-listed securities by 55.9 percent to $8.366bn. This highlights the extent to which their addition broadens and deepens the Bahamian market, giving investors extra securities options.

Placing government debt and the market for its secondary trading on a formalised stock exchange will bring The Bahamas into line with what happens elsewhere in the world. Until now, trading in government debt following its initial issue has been facilitated by the Central Bank via an over-the-counter type arrangement.

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