THE National Industrial and Commercial Investments Limited (NICIL) has issued a US$ 150M equivalent bond facility, arranged by Republic Bank Limited exclusively through its Investment Banking Division, a statement from NICIL said.

Transaction attorney Devindra Kissoon of London House Chambers, a local law firm, was instrumental in the process. According to the statement, the bond will be issued in multiple tranches, with the first tranche of roughly G$17B or US$85M equivalent being issued to local investors on Friday, May 24, 2018.

“With the issue, NICIL becomes the first public issuer to raise debt in the local capital markets in over 10 years. The bond is the largest ever bond facility arranged in Guyana and was oversubscribed by local investor on the first tranche,” the statement said.
According to NICIL, the proceeds of the bond will be used towards capital expenditure and general operations for the Guyana Sugar Corporation (Guysuco). NICIL’s team, lead by Colvin Health-London, the Head of the Special Purpose Unit (SPU), secured the bond to recapitalise the GuySuCo’s operations.

Historically, cash-strapped GuySuCo struggled on its own to raise the funds needed to revamp its operations. However, under the management of Heath-London, funding was secured through the stated-owned entity with the support of the Government of Guyana through a sovereign guarantee.

NICIL acts as a holding company for Government-owned minority and majority interests, property management which includes the acquisition, disposal and rental of Government owned properties.
In addition, NICIL monitors Government’s equity in other companies, engage in development projects and acts as agents for other Government agencies in the disposal of properties or management of companies.

NICIL expects to raise the remaining sum of US$65,000,000 within the next few months through a combination of local and regional investors. A targeted roadshow is expected to be launched within the coming weeks that will likely include investor briefings in Trinidad and Jamaica

Meanwhile, in an interview with Public Relations Officer (PRO) Wanita Huburn-Kisson, on her weekly programme Dollars and $ense, said the magnitude of such a bond transaction occurring here is unique.

LARGEST INVESTMENT
“It is one of the largest financial investments in the Caribbean. What it does show is the confidence of investors to be able to lend money to Guyana with the hope of recouping,” Kissoon said.

The attorney disclosed that the bond was “oversubscribed” which meant there were persons who were ready to invest their money here on the strength of a government guarantee.

“That means well for all of us here, it certainly shows we have a credible country and economy,” Kissoon stated while noting that Guyana has forever long been known as a “rising star in the Caribbean”.

“It is extremely exciting because, generally speaking, this sort of thing in our conservative society hasn’t been done before and what it shows is how quickly we can raise revenue for the purpose of development,” the attorney added.

POSSIBILITIES ENDLESS
He noted that the money will be used to operationalize Guysuco, but stressed that with such a major achievement, the possibilities are endless. Kissoon believes that once properly managed, Guyana can undergo massive infrastructural development in the blink of an eye.

The attorney explained that the majority of the subscription came from the Guyana market such as the National Insurance Scheme and the Guyana Bank for Trade and Industry (GBTI). He noted that the benefit is a 4.75 per cent rate of return which represents a tax free bond.

“It all came from here,” he assured while explaining that such a bond is usually backed by hard assets. But in this case, the bond was raised solely in the strength of the government’s promise to repay.

Kissoon said there is great potential here to raise over US$1B easily for infrastructural projects. “It is a new way of thinking. It is not a manner of structured debt as in traditional mortgage, but it is purpose debt which is tied to a new opportunity for government to repay debt using valuable resources.”

The attorney stressed that if carefully managed, Guyana can have a booming economy far advanced of waiting for revenues to come in to pay back.

“There are many transactions we have not yet contemplated but Guyana is on the cusp of realising – from where we sit Guyana can come up to scratch with Trinidad and Jamaica – this transaction was 100 per cent home grown. Every aspect was handled locally,” said Kissoon who noted that investors have great confidence in the local economy.

“Guyana is robust and strong and we have nowhere else to go but upward. People have put their money where their hopes are,” the London House Chambers attorney concluded.