NASSAU, Bahamas, CMC – The Bahamas government says it will reissue US$1.3 billion of domestic debt due for repayment this fiscal year.
According to the Public Debt Statistical Bulletin for the second quarter of the financial year, 2022/2023, issued by the Ministry of Finance, Nassau had paid close to one billion dollars in debt servicing costs since the start of the fiscal year.
According to the ministry, at the end of December, foreign currency debt amounted to US$4.84 billion, while domestic debt increased to US$6.19 billion.
“The debt redemption profile for the balance of FY2022/23 includes issuances of treasury bills ($904.4 million), treasury notes ($101.5 million), and Central Bank advances ($355.0 million). Key drivers behind the spikes in external payments for FY2023/24 and FY2028/29 are central government’s bond maturities, as is the case with FY2027/28 and FY2029/30 through FY2031/32,” the bulletin noted.
It said liability management exercises would be pursued to address these future obligations.
“The comparatively longer maturity and amortizing profile of the multilateral and bilateral credits contributed to a smoothing out of the spikes linked to the foreign bond redemptions. Domestic redemptions are also dominated by the bond issuances of the central government, which are spread out across the maturity horizon.”
The bulletin noted a near doubling of debt servicing costs, which were estimated at US$989.9 million at the end of December, up from the US$525.5 million incurred during the opening quarter of the financial year 2022/23, for a total of US$1.51 billion in the first half of the financial year 2022/23.
“Reflecting the composition of the government’s debt, 66.9 percent of payments pertained to Bahamian dollar liabilities, with the remaining 33.1 percent directed towards foreign currency obligations.
“Principal payments amounted to US$807.0 million or 81.5 percent of these costs, with 74.1 percent representing Bahamian dollar debt. Interest payments of US$182.9 million (18.5 percent of the total) comprised 64.7 percent in foreign currency and 35.3 percent in Bahamian dollars,” according to the bulletin.
The Ministry of Finance said the government could extend the average time to maturity (ATM) to 7.68 years at the end of the quarter from the 7.26 years held at the end of December 2021.
“The average 17.22 percent of the portfolio falling due in one year compares favorably with a higher 20.14 percent a year earlier and continues to be heavily weighted by the short-term treasury bills and notes, which placed the internal component maturing in one year at a dominant, although reduced, 47.36 percent relative to 55.69 percent at end-December 2021.
“Conversely, external debt maturing within one year at 9.38 percent of the total was below the year-earlier 10.82 percent and reflected scheduled bond and loan redemptions.
“With approximately 85.8 percent of the debt portfolio denominated in US dollars, to which the BSD [Bahamas dollar] is pegged, the foreign exchange risk in the debt portfolio remains muted. The remaining exposure linked to the SDR [special drawing rights], the EUR (Euro] and the CHF [Swiss franc] loans is comparatively tiny.
“Total foreign currency debt represented 45.78 percent of total government debt in end-December 2022 as against 43.25 percent in end-December 2021,” the bulletin added.
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