NEWS

Promising Feedback From Investors During Roadshow

Government is understood to have received very promising feedback from investors during a recent roadshow which resulted in a new US$200 million global bond being raised. Minister for Finance, Aiyaz
24 Sep 2015 12:40
Promising Feedback From Investors During Roadshow
Attorney-General and Minister for Finance Aiyaz Sayed-Khaiyum.

Government is understood to have received very promising feedback from investors during a recent roadshow which resulted in a new US$200 million global bond being raised.

Minister for Finance, Aiyaz Sayed-Khaiyum, highlighted this yesterday.

“In fact, many suggested that given the good story of Fiji, we should raise $500 million as that is the industry benchmark and thereby getting lower interest rates,” he said.

“We met with over 50 plus global fund managers and 20 plus new investors.”

Mr Sayed-Khaiyum informed that 20 new investors participated in the new bond issue.

These included some of the biggest global institutional investors such as Bank New York Mellon, Allianz Global, Newton IM, Pictet IM, Eaton Vance.

Mr Sayed-Khaiyum further announced that the commission rate paid to ANZ as the lead manager and book runner was also lower than the commission paid by the SDL Government when it raised the bond by using JP Morgan.

In 2006, JP Morgan charged 0.85 per cent which was US$1.274 million for a Us$150 million issue.

He said ANZ charges are 0.55 per cent which is US$1.1 million for a US$200 million issue.

He thanked ANZ for its support to the Fijian Government and the country.

 

Bonds Frequently Asked Questions

What is a bond?

– Bonds are commonly referred to as fixed-income securities and are one of the three main generic asset classes, along with stocks (equities) and cash equivalents.

– A bond is a debt investment in which an investor loans money to an entity (typically Sovereigns, State Owned Enterprises, Financial Institutions and Private Corporates) which borrows the funds for a defined period of time at a fixed interest rate.

– At the end of the defined period of time (tenor of the bond), the funds will be repaid to the bond investors.

How does a bond work?

– The borrowing entity (issuer) issues a bond that contractually states the interest rate (coupon) that will be paid and the time at which the loaned funds (bond principal) must be returned (maturity date).

Who issue bonds?    

– Bonds are widely issued by various Issuers such as Sovereigns, State Owned Enterprises, Municipalities, Private Corporates etc. to finance a variety of projects and importantly build long term relationship with International investors.

– In last 15-years, over 130+ Sovereign nations across the world have issued USD bonds in the international markets.

Who has issued USD bonds in Asia-Pacific?

– A number of Asian countries are regular issuers in the international markets including Philippines, Indonesia, Vietnam, Sri Lanka, South Korea, Mongolia and others like Pakistan.

– State Owned Enterprises of China and India have also issued bonds in the international markets.

Who do Sovereign (countries/ Governments) issue bonds?

– A bond issue allows the Sovereign to diversify its sources of funding and allow for access to alternate sources of long term and cheap capital for infrastructure build out.

– A new bond sets a benchmark for future funding access and broadens the Sovereign investor base beyond multilateral agencies and local investors.

– In 2015 YTD (year to date) alone approx. USD 68 billion have been raised by 46 Sovereign nations in the international USD bond markets.

What are the details of Fiji’s fund raising exercise?

– The Republic of Fiji has successfully issued a USD200 million for 5-year 6.625 per cent fixed rate coupon bond which was subscribed by international investors across Asia, Europe and Offshore US.

– The Republic of Fiji has strategically reduced the debt of the nation by refinancing the USD 250million 9.00 per cent existing Fiji Sovereign bonds.

– The subscription rate for the refinancing was one of the highest in the market- achieved 97 per cent refinancing (USD 243.15million to be retired now and remaining USD6.85 million at maturity date)

– Fiji’s USD 200million bond was subscribed by – 55 per cent in Asia, 18 per cent in Europe and 27 per cent by Offshore US accounts.

Who are the bond investors?

– Bond investors include global institutional investors such as fund and asset managers, banks, insurance and pension funds  and private banks.

 

Feedback:  rachael.nath@fijisun.com.fj

 

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