James Smith, minister of state for finance, told The Tribune yesterday, that he expected the Bahamas’ $200 million bond issue to have a premium of between 1.25 and 1.5 per cent above US Treasuries, meaning the attached interest rate was likely to be just over 6 per cent.
Mr. Smith said he looked for the debt issue to have an accompanying low interest rate, which was expected to be between 125 to 150 basis points over long term US treasury bonds. The basis points are determined by 100 points, which is equal to one percentage point.
With the basis points the premium would fall between 1.25 and 1.5 per cent, which would be added to the 4.76 per cent interest rate calculated by the A3 corporate bond rating. This would mean the government could end up paying between 6.01 per cent and 6.26 per cent in debt servicing interest on the $200 million debt issue.
Source: The Tribune
