SINPF Board purchase new gov’t long term development bond
The Solomon Islands National Provident (SINPF) Board has purchased a new $60 million bond issued by the Government on Tuesday 22 December 2020 within the framework of an emerging secondary market for government debts.
This was announced by SINPF in a statement yesterday.
The Central Bank of Solomon Islands (CBSI) has commenced what initially can be seen as the beginnings of a secondary market for government debts, where holders of government debts can sell their assets to the Central Bank, the statement said.
The CBSI has also approached other SIG debt holders.
The purchase immediately followed the sale of the Fund’s recently purchased covid19 $60M Development Bond to the Central Bank of Solomon Islands (CBSI) on 21 December 2020.
The Bond that was sold to the CBSI was purchased by the SINPF Board in June 2020. The $60 million proceeds from the sale of the bond were used to purchase the new bond.
Prior to the sale, the SINPF Board received its $1.5 million 6 months interest on 21 December 2020, before selling.
The new negotiated 10-year bond was issued by the government on the same terms and conditions as the previous bond: 1) the face value of $60 million, 2) coupon rate of 5% pa, 3) grace period of 3 years where interest only of $1.5M to be paid after every 6 months, and 4) amortised principal and interest of $ 5,786,714.29 to be paid half-yearly following the 3 years grace period.
The Fund’s current investment exposure to Government remains at $210 million representing just under 6% of the Fund’s investments portfolio.
The Board has an upper limit of 15% with a 10% target for government investments.
The new bond ensures that the Fund continues to receive an attractive annual 5% interest income as previously enjoyed by members of the Fund under the earlier bond, whilst the government will use the proceeds of the bond to finance its key priorities to keep the country’s economic engine going.
