Glaring transparency and accountability issues over GuySuCo’s US$150M bond deal

Glaring transparency and accountability issues over GuySuCo’s US$150M bond deal – Opposition

Jun 12, 2018 News

There is need for the Coalition Government to explain several issues, which have emerged in relation to the $150M syndicated bond secured for the four sugar estates which were closed last year.
This is the view of Opposition Leader, Bharrat Jagdeo, who raised several questions about the deal, in a statement, yesterday.
According to a statement from Jagdeo, the Government has failed to provide the Parliament or the public, with details on how the monies will be used.
The state-owned National Industrial and Commercial Investments Limited (NICIL) received roughly US$85M, which was disbursed on May 24, 2018, with the residual tranche to be issued to NICIL as is needed.
NICIL is expected to raise US$65M through a combination of local and regional investors, including those in Trinidad and Jamaica. NICIL’s team lead by Colvin Health-London, the head of the Special Purpose Unit (SPU), structured the bond to recapitalize GuySuCo’s operations.
“Government has a duty to explain why it did not borrow the money itself if a sovereign guarantee was being issued. Government typically borrows at interest rates below 2% and repayment terms over 30-40 years. Why is the NICIL-GuySuCo SPU borrowing at 4.75% and repaying this over five years, with a full Government guarantee?” Jagdeo questioned.
According to the Opposition Leader, there is no information as to what assets were used to secure the bonds. He said that there is extreme concern about the risk of the Treasury having to pay back the investors and have serious concerns on whether investors are simply relying on this guarantee when there are glaring transparency and accountability issues.
He reminded that the Parliament recently raised the debt ceiling to guarantee debt to the amount of $50B. Apart from a mere reference to a $30B GuySuCo bond, Jagdeo stated that not a single detail was provided.
In the past, Jagdeo noted that funding for projects like the Berbice Bridge or the Marriott Hotel, were accompanied by considerable documentation and studies.
“Where are the documents and details for this huge US$150 million bond? Why is it a secret when a public guarantee is being issued? The Berbice Bridge and Marriott did not have sovereign guarantees,” Jagdeo stated.
Republic Bank was reportedly able to tap successfully the local investor market to raise mutually beneficial financing for the Guyana Government and investing subscribers.
Reports indicated that the bond was oversubscribed by the local investor market shortly after its announcement.
GuySuCo has struggled to raise the funds needed to revamp its operations and has relied heavily on Government bailouts to stay afloat.
The estates have been placed under the SPU which is tasked by Government to execute privatization plans for the Skeldon, Rose Hall, Enmore and Wales Estates that were closed in keeping with Government’s ‘right-sized’ approach for the sugar corporation.

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