The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government has to refinance almost $2.4bn in maturing debt during the six months to end-June 2024, it has been revealed, with its euro-denominated liabilities almost doubling in percentage terms.

The Ministry of Finance’s debt management office, in its statistical bulletin for the three months to end-December 2023, reaffirmed that just over 47 percent of government debt due to mature during the 2024 first half is represented by short-term Treasury Bills. Bahamian dollar-denominated debt accounts for 79 percent, or $1.893bn, of the total amount that has to be rolled over with the foreign currency share at $505m.

“The debt redemption profile for the balance of the fiscal year includes re-issuances of Treasury bills ($1.133bn, Treasury notes ($67.6m) and Central Bank advances ($192m), and the $300m external bond maturity due in January 2024,” the report said, acknowledging that more than one-quarter of the Government’s debt portfolio is still due to mature in one year or less.

“The average time to maturity (ATM) trended lower to 6.4 years at end-December 2023 from 6.48 years at end-June 2023, reflecting developments in both the domestic and external components,” the debt management office report added.

“At end-December 2023, a reduced 26.5 percent of the debt portfolio was due to mature in one year, down from 30.1 percent at end-September and 28.1 percent at end-June 2023. This was attributed to the contraction in both the external and domes- tic components, with the 11 percent decline on the domestic side to 14.15 percent influenced by the reduction in Central Bank advances.

“Reflecting shorter- term external financing during the quarter, the proportion of external debt maturing within one year was lowered to 14.15 percent.” Simon Wilson, the Ministry of Finance’s financial secretary, has repeatedly reassured that refinancing or rolling over the significant debt chunk maturing in the short-term will not pose a problem, and the $300m external bond maturing this year has already been repaid.

However, some $212.6m or almost 60 percent of the $355.6m in net new Bahamian dollar borrowing during the six months to end-December consisted of short-term debt in the form of 90-91 day Treasury Bills.

“That’s problematic,” one source, speaking on condition of anonymity, said. “They’re relying more on near-term obligations. The short-term risk profile is increasing. They’re shortening the average maturities when they should be moving in the opposite direction.”

They also pointed out that the $1.133bn in Treasury Bill debt due to mature before end-June are effectively becoming long-term debt obligations because they will have to be repeatedly rolled over or refinanced.

Meanwhile, the report also revealed that the Government’s debt denominated in euros increased as a proportion of the total by 1.7 percent to 3.9 percent at end-December 2023 after it accessed a near-$250m credit line from Deutsche Bank.

“Reflecting a new credit facility, debt in euros was elevated by 1.7 percentage points to 3.9 percent of the overall portfolio,” the Ministry of Finance report added. “External debt approximated $5.03bn at end-December 2023, and 44 percent of the debt portfolio, which represented a gain of 0.5 percentage points since end-June 2023.

“The $25m net accretion across the first six months comprised the following transactions: Disbursement in December of a new 226m euro (approximately $248.8m) credit facility from Deutsche Bank.” Meanwhile, repayments on existing foreign currency debt totalled $245.9m.

“At end-December 2023, public sector debt was estimated at $12.748bn, which corresponded to respective gains of $191.4m (1.5 percent) relative to end-September 2023 and $98.5m (0.8 percent) since end-June 2023,” the Ministry of Finance report added.

“Although foreign currency indebtedness expanded by $175.1m (3.1 percent) during the review quarter, the year-to-date change was a contraction of $7.5m (0.1 percent). At end- December 2023, the stock constituted 45.3 percent of the total portfolio - equivalent to the average share registered over the previous four quarters.

“Growth in the Bahamian dollar component for the quarter was lower at $16.3m (0.2 percent). How- ever, the higher level of activity in the first quarter elevated the year-to-date gain to $106m (1.5 per- cent). The corresponding proportion in total debt, at 54.7 percent, was also the average obtaining over the past year.”