Johnson: No current risk to the country’s debt portfolio

There is no element of The Bahamas debt portfolio that is currently at risk, Acting Financial Secretary Marlon Johnson told Guardian Business yesterday, explaining that the Debt Management Unit continuously explores ways to optimize this country’s growing debt.

Some looked critically at the government’s intention to pursue “a liability management transaction for at least 50 percent of its existing US$300 million 2024 bond issue”, which was revealed in the recently released Pre-Election Economic and Fiscal Update Report.

It was suggested that the liability management transaction could signal that the government is beginning to come close to not being able to service certain debt obligations.

However, Johnson explained that this move is simply one part of many plans in the Debt Management Unit’s playbook to ensure the country stays on top of its debt management.

“As the Debt Management Unit continues to mature, we’ll be taking a much more active approach as far as liability management is concerned,” said Johnson.

“In so doing, when conditions are favorable to government, we will take open market transactions, we will take transactions with our bondholders to try to optimize the portfolio in terms of the interest rates paid, the tenures of the bonds, so that we can smooth out the entire portfolio to optimize as much as we can on our debt payments.”

He said many people are not knowledgeable about how debt management units operate around the world, and contended that “under no circumstances” is “any element of our debt portfolio” under threat of default.

“We are managing it quite judiciously,” said Johnson.

“Part of the reason for having debt management legislation and a Debt Management Unit is that we’re constantly evaluating the market for opportunities to save the taxpayers money and to ensure the debt portfolio is as manageable as possible. 

“The impetus of the whole debt management act and the creation of a Debt Management Unit is to ensure that we have full-time attention on our debt portfolio.”

According to the pre-election report, government debt stood at almost $10 billion, or 86.3 percent of the country’s gross domestic product (GDP). That total is predicted to hit $11 billion by next year.

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