Has St Lucia’s Borrowing jumped in 2012?

The St Lucia government issues 91-day Treasury Bills twice a quarter on the Regional Security Market according the schedule listed here: http://www.ecseonline.com/cal_issues.php . Each 91 day Treasury Bill issuance has a maximum discount rate set to 6.0 percent in the prospectus. See: http://www.ecseonline.com/documents/FinalProspectusGovernmentofSaintLucia27mand25mTreasurybillsdatedJune2012.pdf for the current prospectus. The figures for the 7 batches of 91-day Treasury Bill that have been issued in 2012 are as follows:
The Discount Rate is an annualized rate of return based on the par value of the bill. Further information on Treasury bills can be found at: http://www.treasurydirect.gov/indiv/research/indepth/tbills/res_tbill.htm.
Discount rate of recent US Treasury Bills can be found here http://www.treasurydirect.gov/RI/OFBills. The US Treasury Bill discount rate is much lower at 0.1%
The jump to a 6.0% final discount rate is a major concern and could major ramifications on the economy. 6.0% is the maximum discount rate that is set in the prospectus and prior to the October 15 issue, the final discount rate had always been much lower.

Some questions about this
1) Do the bond investors know something about the St. Lucian economy that is not yet public?
2) Why did the final discount rate increase so dramatically and the oversubscription value fall compared to the previous issues this year?
I have not read any explanation or response by the government about the discount rate that was obtained for this week’s Treasury Bill issue.
3) Has borrowing costs increased due to the introduction of VAT? Or was it due to Grenada’s downgrade by the S&P for a delay in bond payments (the S&P has subsequently upgraded Grenada’s rating)?
4) Interestingly the final discount rate of 6.0% meant that for the first time this year the Government of St. Vincent & the Grenadines obtained a lower final discount rate of St. Lucia.
Their discount rate for Treasury Bills issued on October 15th 2012 was 5.82%. Are investors now more confident in the St. Vincentian economy as compared to the St. Lucian economy?
The big open question is what will the final discount rate for the final 91-day Treasury Bill for 2012 which is to be issued on October 24th 2012. Will the discount rate remain at a 6.0% or will it fall back to the usual levels.

Share your feedback with us.

Comments are closed.

← Go Back | Commentary Back to Top ↑
THE STAR Newspaper
Magazines available in THE STAR Newspaper
2Nite Magazine for Saturday October 1st, 2016 ~ Issue no. 204
2nite Magazine
Sports & Health Magazine for October 1st, 2016 ~ Issue no. 112
Sports & Health Inc

Lifestyle & Archives

  • 2Nite Magazine TV

    2Nite Magazine's Candid Camera

    You never know where 2Nite Magazine will capture you next. You may very well be the next one 'caught on candid camera' at the next event!! If its HIP and its HAPPENING, then its in 2Nite! Hosted by: Faye-Chantelle Mondesir (Empress Faye)

    Posted by 2nite Magazine on Friday, 22 January 2016
  • Contact us via WhatsApp with news on 1 758 720 2896

    What's App
    Send us your news or contact us with your story via What's App.
  • Sound your voice and cast your ballot!

  • Poll for the week

    See all polls and results
  • TALK or VENT here!

    TALK or VENT constructively and share your feedback on our weekly news and stories. CONSTRUCTIVE talk is welcome. You have a voice with The STAR Newspaper!
    TALK or VENT constructively and share your feedback on our weekly news and stories. CONSTRUCTIVE talk is welcome. You have a voice with The STAR Newspaper!
  • Subscribe for latest news and updates

    Enter your email address to subscribe and receive latest news and updates via email.

  • The St.Lucia STAR Newspaper

  • STAR Articles