Deputy Prime Minister and Minister of Public Works Desmond Bannister said yesterday that new amendments to the Electricity Rate Reduction Bond Bill, which will be presented to Parliament when it reconvenes, should result in Bahamas Power and Light (BPL) getting lower interest rates on the financing related to the rate reduction bond (RRB).
The power company is hoping to place $535 million on the capital markets before the end of the year, but is awaiting parliamentary approval on amendments to the bill that would legitimize the rate reduction bond.
“The challenge is that there are several different types of investors on the capital markets. The original rate reduction bond legislation did not contemplate the kind of flexibility that would be required. So what we will seek to do when we go back to Parliament is amend it in a way that permits them to invest in manners that were not contemplated in the original legislation, and the reasons for doing that are they will be a lot more flexible with how they can invest and they’re going to be able to get even lower interest rates and that’s even better for the Bahamian people,” Bannister told Guardian Business.
“So the whole idea is, we will amend the legislation, give BPL more flexibility with their investment and also be able to get low interest rates and be more attractive.”
BPL is seeking financing to pay off more than $300 million in legacy debt and to invest in upgrades to its distribution and transmission networks. It intends to place $450 million on the international markets and raise the rest of the capital locally.
“The markets are very interested right now. It is high, they are extremely interested in this offering,” Bannister said.
“You know utility bonds tend to be very attractive and this is a very attractive one, particularly in regards to all that has been done and all of the improvements that have been made at BPL over the last few years.”
He continued, “The whole idea and the guidance is that there must be an opportunity for Bahamians to invest in the first instance. So whatever we do, there is going to be an opportunity for Bahamians to be able to have a stake.”
The government passed the Electricity Rate Reduction Bond Bill, 2019 in Parliament in December 2019 as BPL prepared to go to market by February 2020. The global economic crisis caused by the COVID-19 pandemic caused BPL to hold off on the placement until spring this year, however it was delayed again.
Skepticism has risen over the delays, with critics doubting whether the placement will ever take place or that there is an appetite for BPL’s debt in the markets.
The post Rate reduction bond bill amendments to get BPL better interest rates appeared first on The Nassau Guardian.
source https://thenassauguardian.com/rate-reduction-bond-bill-amendments-to-get-bpl-better-interest-rates/
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