Federal Government to Offer New Options for Treasury Bills

One commentator has even gone as far to suggest that if urgent steps are not taken by the Government to reduce the National Debt and stabilize the financial health of the public sector, such instruments, used by governments to raise money for its operations, could be at risk.

Now in an obvious response to such charges and perhaps as a means to allay fears within the country, the Federal Government on Tuesday 5th April, announced that instead of fear, there has been strong investor confidence for its Treasury Bills. As a demonstration of that confidence, the Prime Minister and Minister of Finance, Dr. Denzil Douglas, on Tuesday, at the end of his weekly radio program, on the public owned ZIZ, indicated that his administration is about to enhance its Treasury Bill portfolio.

Dr. Douglas said, “The Government of St. Kitts & Nevis is enhancing its Treasury Bill issuance program in response to investor demand for greater options and longer dated investment choices. The Federal Government currently issues Treasury Bills with a 91 day maturity only but starting on the 17th of May 2011, the Government will make available new 182 day and 365 day Treasury Bill to be issued alongside the 91 day instruments.”

The Prime Minister informed the public that “Existing and new Treasury Bill investors would be able to choose any combination of these three instruments through the established procedures.”

Dr. Douglas assured listeners that “The letters that will be sent to existing Treasury Bill holders by the Accountant General Department this week will confirm the improved investment menu. Existing Treasury Bill holders wishing to roll over into any of the new securities must ensure their responses reach the Accountant General’s Department by the 20th of April 2011.”

The Prime Minister made the claim that the Federal Government is continuing to experience a very high demand for Government Treasury Bills. He said this demand is from both local and regional investors, and he stated that this has been confirmed by the roll over rates that are close to 100%.

Dr. Douglas said the Ministry of Finance has also had requests from investors for an option to lengthen the maturity of the investment, whereby avoiding the inconvenience of having to go through the roll over process every three months.

The St. Kitts & Nevis leader stated that the Government is pleased to be able to respond to this request from investors and do confirm that investors who do elect longer maturities will be offered moderately increased yields

The Government expects that the new options that will be offered to investors will also enable the average life of the public debt portfolio to be lengthened over time, said Douglas.

Another initiative that is being planned, according to the Prime Minister, is the start of the gradual integration of the local Treasury Bill market with the regional government securities market, the RGSM. The Labour leader is of the view that this is a move that would benefit both the Government and the investors by boosting liquidity.

Dr. Douglas promised that further announcements will be made in this regard, in due course.

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