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
