27 June 2025

The Government of the Bahamas has marked its first return to international capital markets since 2022 with the successful issuance of an 11-year, US$1.067bn bond, proceeds of which will fund the repurchase of US$767mn in outstanding Eurobonds.

Announcing the transaction on 18 June, the Office of the Prime Minister highlighted strong investor demand, noting that the order book was “3.9 times oversubscribed” and that the bond closed at “a final coupon and re-offer yield of 8.250%,” reinforcing the country’s favourable yield-curve repricing.

A three-day investor roadshow, covering more than 60 institutional accounts across North America, Europe and the Middle East, was used to inspire global confidence in the Bahamas’ economic footing.

“Participants expressed strong support for The Bahamas’ credit fundamentals, ongoing fiscal consolidation, and economic outlook, driving positive transaction outcomes,” the government statement said.

Key to the deal was a liability management operation that extended the average maturity of the outstanding Eurobond portfolio by 2.1 years, from various maturities between 2028 and 2038 to a single maturity in 2036.

This reframing of the debt profile will reduce scheduled principal repayments by US$451mn over the next three years, smoothing the government’s near-term financing needs. “Proceeds from the new issuance will be primarily allocated to fund the associated liability management operation, with a portion expected to support national development priorities, including infrastructure investments,” the statement added.

In parallel, another round of Eurobond buybacks closed on 16 June. Under the terms of that programme, bondholders were offered cash for their securities at prices the government would determine “in its sole discretion,” enabling selective repurchases across six bond issues. While some maturities traded at a premium to par—such as a 9% coupon bond issued at the height of the COVID-19 pandemic—others were bought back at deep discounts, sharpening the complexity of the overall operation.

The issuance follows April’s positive rating actions by Moody’s and Fitch, which raised the Bahamas’ credit assessment on the back of fiscal consolidation efforts. It is also part of a broader external financing strategy that includes a US$300mn Debt Conversion Project for Marine Conservation (closed in November 2024) and a US$500mn international loan guaranteed by the Inter-American Development Bank in January 2024.

Rothschild & Co. and Hogan Lovells served as sole financial adviser and international legal counsel, respectively, while BNP Paribas, Citi and Deutsche Bank acted as global coordinators and joint bookrunners with CIBC FirstCaribbean.

Despite the applause for robust demand, some market observers have urged greater transparency on the timing and cost implications of the transaction. Gowon Bowe, CEO of Fidelity Bank (Bahamas), described the refinancing as “probably one of the most monumental announcements by the Government, but also one that highlights a lack of comprehensive disclosure.”

“No matter what price is offered, if there is a significant risk of non-payment persons won’t run to it. It’s important to note that, in accessing capital markets with the size of transaction that has been achieved, that requires confidence by investors notwithstanding whether your credit rating is high or low,” said Bowe, commending the strong subscriptions.

However, he questioned why the government proceeded now, given expectations of global interest-rate cuts. “Why would we seek to do this refinancing today when there’s an expectation of at least a 50-50% chance of recession in the US?” he asked.

With no significant principal amounts maturing until 2028, he argued, The Bahamas had the luxury of patience to potentially secure a lower yield. Additionally, Bowe noted that the new 8.25% coupon exceeds the interest rates on most of the bonds being retired, ranging from 6.625% to 7.125%, raising the prospect of higher long-term debt-servicing costs despite upfront principal savings.

Prime Minister and Finance Minister Philip Davis hailed the deal as a vote of confidence in The Bahamas’ economic trajectory. In response, Bowe urged the administration to clarify whether the goal was extending maturities or reducing borrowing costs. “If it is that we are trying to extend the term, then I would say, okay, I understand what you’re doing. But we were not under pressure that we had a billion dollars coming due next year,” he contended.

The government’s readiness to answer such questions will shape market perceptions ahead of future financings. For now, the US$1.067bn bond stands as both a testament to investor trust and a reminder of the trade-offs inherent in sovereign liability management, balancing immediate fiscal relief against the cost of higher yields over the long haul.

Source: Caribbean Insight – 27 June 2025 Volume 47, Issue 13

13 June 2025

ExxonMobil Guyana Limited (EMGL) has reported substantial profits of US$4.73bn for 2024, marking a significant 62% increase from US$2.92bn the previous year.

The jump is primarily driven by increased oil production from the Payara project, which commenced operations in November 2023.

John Colling, EMGL’s Vice President and Business Services Manager, attributed this sharp increase to the Prosperity Floating Production Storage and Offloading (FPSO) vessel becoming operational.

“In 2024, ExxonMobil Guyana Limited generated US$8bn in revenue, which is up about 60% from the prior year, and that’s really driven by the Prosperity FPSO coming online and higher production volumes,” said Colling.

Despite these robust profits, Colling stressed that ExxonMobil remains financially behind on its investments. He explained that the consortium has invested a total of US$40bn but has only recovered US$33bn through cost recovery processes outlined in the 2016 Production Sharing Agreement (PSA).

“ExxonMobil Guyana and its partners have invested US$40bn to date and have only recovered US$33bn. So, there is a cost recovery ongoing,” he clarified. Colling projected, however, that Guyana’s revenue would substantially increase once these costs have been fully recovered.

“From splitting between EMGL and its partners and the Government of Guyana, we expect by the end of the decade, that the Government of Guyana will be receiving US$10bn per year in profit oil and royalty,” Colling estimated.

Under the current (PSA) from 2016, ExxonMobil can recover its investment, capped at 75% of revenue from oil lifts. However, Vice President Bharrat Jagdeo and others suggest Guyana’s revenue share will significantly increase as soon as these amortisation costs are fully recovered.

Currently, Guyana receives approximately 14.5% of profits, with this expected to rise substantially by the decade’s end, potentially reaching US$10bn annually in profit oil and royalties.

The ExxonMobil-led consortium, including partners Hess and China National Offshore Oil Corporation (CNOOC), earned combined profits of US$10.4bn in 2024, up 64% from the previous year. Hess alone reported profits of US$3.1bn, and CNOOC recorded US$2.5bn in profits, both experiencing a 67% boost compared to 2023.

ExxonMobil and its partners have seen their combined asset base rise substantially, increasing by 23% to reach US$34.3bn in 2024, up from US$27.9bn in 2023. Colling highlighted the significance of this growth, stating that the expanded asset base provides the “initial layer of financial assurance” against potential oil spill risks. The company also maintains third-party insurance of US$600mn and a US$2bn affiliate guarantee, adding further layers of financial protection.

“Our number one priority is safety to ensure that a spill never occurs. But in the event something were to occur, there are several layers which provide financial assurance,” Colling affirmed.

He also indicated the possibility of increased insurance costs due to a Venezuelan military vessel entering Guyana’s Exclusive Economic Zone earlier this year. “It’s possible but I prefer not to speculate,” said Cooling, wary of confirming a definite hike. He also acknowledged that growing activity and increased assets might naturally lead to higher insurance premiums.

Production from the Stabroek Block surged significantly, increasing from 391,000 barrels per day (b/d) in 2023 to 616,000 b/d in 2024. Further production increases are anticipated as additional projects, including Yellowtail, become operational later this year, potentially pushing daily production beyond 900,000 barrels by the end of 2025.

Reflecting this continued expansion, the Government of Guyana has introduced a revised model PSA for future contracts, aiming to enhance national revenues. Notable amendments include reducing the cost recovery ceiling from 75% to 65%, increasing royalty payments from 2% to 10%, and instituting a 10% corporate tax. Additional provisions feature signing bonuses as high as US$20mn for deep-water block contracts.

Looking ahead, ExxonMobil intends to triple its oil output in Guyana within the next five years, committing to significant additional investments throughout the decade. These initiatives reflect both the company’s and the government’s intentions to responsibly manage this critical economic resource, ensuring sustainable financial benefits for the nation.

As Guyana anticipates increasing oil revenues, effective governance and strategic resource management will be crucial. With careful stewardship, the nation could transform its economic prospects dramatically by 2030, navigating the delicate balance between short-term gains and sustainable development, and of course the upcoming general election.

Source: Caribbean Insight – 13 June 2025 Volume 47, Issue 12

30 May 2025

Suriname’s political landscape has been thrust into high-stakes coalition negotiations following Sunday’s general election, which delivered a near-deadlock between the ruling Progressive Reform Party (VHP) and the opposition National Democratic Party (NDP).

With neither party securing a parliamentary majority, the battle to form a governing coalition has begun, as the country stands on the cusp of a potential oil-fueled economic transformation.

Preliminary results show the NDP secured 18 seats in the 51-member National Assembly, narrowly edging out incumbent President Chandrikapersad Santokhi’s VHP, which captured 17.

Sixteen seats were split among smaller parties, making them pivotal players in the race to form a new government and elect the next president, an outcome that requires a two-thirds parliamentary majority, or 34 votes.

“We are on the right track. There are still a few thousand votes to be counted, and we hope that it will continue in our favour,” said NDP chairwoman Jennifer Geerlings-Simons. “But we are where we are now, and we will continue from there. This is the first step and believe me, we are already working on it,” she added.

President Santokhi, who received the highest number of individual votes with 42,521, acknowledged the need for collaboration. “At some point, you will have to use the result as a basis. That is the official mandate of the people to the political parties. Then you see what it is, how big it is, and on that basis, you work out options for cooperation,” he said, adding that the VHP “is open to any cooperation that is necessary for the progress of the development of the country.”

The NDP’s vice-chairman, Ashwin Adhin, said that the party’s focus was on forming a majority bloc led by Geerlings-Simons, who succeeded the controversial Desi Bouterse as party leader. “I had indicated that the majority of votes determines the candidate. She has the most votes, so a man is a man, a word is a word,” he added, reaffirming his support for her candidacy.

The NDP has signed an agreement with five minority parties including the Alternative 2020 Party (A20), the Brotherhood and Unity in Politics party (BEP), the General Liberation and Development Party (ABOP) led by former Vice President Ronnie Brunswijk, the National Party of Suriname (NPS), and the Pertjajah Luhur Party (PL). The latter three were until recently coalition partners of the Santokhi Administration, but have withdrawn their support, citing  exclusion in policy creation.

With vote counting and verification still ongoing, the country waits for confirmed tallies to pave the way for the National Assembly to meet and choose a president. The coalition led by Geerlings-Simons at present holds 34 seats, which would be just enough to secure the two-thirds majority needed to form a government.

If Geerlings-Simon is elected as president, she would be the first female to hold that office in the country’s history. “There has not yet been any discussion about ministerial positions, but about how the governance of the country can be improved. On that basis, we have reached an agreement and decided to sign the letter of intent,” said the presidential hopeful at the agreement signing.

Meanwhile, concerns have been raised about the electoral process, particularly regarding polling station 614 in the Brokopondo district. The Independent Electoral Office (OKB) admitted there were “suboptimal” conditions at the station, citing staff inexperience and logistical challenges, but firmly rejected allegations of manipulation or fraud. “We emphasise that there are no indications that there has been deliberate manipulation or fraud,” the OKB said in a statement.

This election carries immense implications for Suriname’s future. The next administration will oversee the early stages of the country’s US$12.2bn GranMorgu offshore oil development in Block 58. Operated by TotalEnergies, the project is expected to begin production in 2028, potentially transforming Suriname’s economic fortunes.

Santokhi’s VHP, aligned with a market-driven agenda, is credited with restoring fiscal discipline through an IMF programme and investment reforms. However, austerity measures have sparked public dissatisfaction. By contrast, Geerlings-Simons and the NDP advocate for increased social spending, equitable oil revenue distribution, and greater scrutiny of foreign corporate contracts.

“This general election is assessed as a critical juncture,” Bloomberg News noted, “not merely a transfer of power, but impacting which developmental path Suriname will choose going forward.”

Political analysts caution that without careful management, Suriname risks falling into a resource trap. “If Suriname becomes excessively dependent on oil revenue, it may fall into a ‘resource curse’ that could hinder long-term growth,” experts warn.

Appearing to hold on to some hope, in a message to supporters, Santokhi urged unity and resilience. “The future offers new opportunities to make a difference. Let us put our shoulders to the wheel and continue to build a stronger and more prosperous Suriname together.”

As the nation waits for the official election results, electoral authorities report that data from around 40 polling stations still needs to be uploaded to the Ministry of the Interior’s dashboard as of Thursday. Additionally, turnout figures from 27 stations have yet to be entered, which is estimated to represent roughly 20,000 votes.

At a press briefing, Chair of the IT Elections Committee, Previen Ramadhin cautioned that the results remain subject to change, with recounts requested at several polling stations across different districts.

Source: Caribbean Insight – 30 May 2025 Volume 47, Issue 11