BPL targeting 7.5% to 8% coupon rate on bond

Bahamas Power and Light (BPL) is targeting between a 7.5 percent to 8 percent coupon as a sovereign entity on its upcoming rate reduction bond placement, the company’s Chairman Dr. Donovan Moxey said yesterday, adding that that could be renegotiated as the world and the country comes out of the economic slump caused by COVID-19.

Moxey, who made the comments on Guardian Radio’s “The Revolution” with host Juan McCartney, said BPL went after a $530 million placement on the international markets and positioned itself to be seen as a standalone utility in order to get the best coupon rate, rather than present itself as a government entity, which could cause the company’s bond to incur a high interest rate that would be passed on to Bahamians.

“When we first modeled this out we thought we could get our fuel costs down to 12.5 cents. We have improved that by two cents, so we’re well ahead of the game and we believe that we can get that even lower,” said Moxey.

“Then when we put the bond together, our goal was to go out to the market and get a rate somewhere between 7.5 percent to 8 percent, we did the calculations where we said it would be about a 15 percent increase on the average Bahamian bill – the average bill is $180.

“What we ended up saying is we cannot stick with that unless we get a very favorable rate. Everybody knows when COVID-19 happened, the world markets just went haywire, from a financial standpoint.

“The Bahamas then, given how COVID-19 affected our number one industry, we were then looked upon by the international investment community as a very high risk.”

Moxey said he is confident, however, given the rate reduction already in play because of fuel hedging and the use of more efficient engines, that Bahamians will not have to suffer an extreme increase in rates when the bond is placed, though he could not give an exact figure. Moxey said that figure still depends on what coupon the bond is placed at. That placement still depends on when the government brings legislative amendments related to BPL’s rate reduction bond to Parliament be ratified.

Moxey explained earlier this month that BPL would likely place the bond by early February if the changes are made this month.

The post BPL targeting 7.5% to 8% coupon rate on bond appeared first on The Nassau Guardian.

source https://thenassauguardian.com/bpl-targeting-7-5-to-8-coupon-rate-on-bond/