A 6.5 million dollar municipal bond has been launched in Belmopan for the benefit of its residents. The Belmopan City Council held a Press Conference on Thursday of last week in the VIP room at the Bull Frog Inn to launch their Municipal Bond. Mayor Khalid Belisle along with Senator Stephen Duncan of Heritage Bank Ltd. and Mr. Erwin Perez of Legacy Fund Ltd. made presentations to the gathering and the media. The Belmopan City Council’s newly elected Deputy Mayor, Ralston Frazer was the emcee for the event.
A Municipal Bond is like a Certificate of Deposits (CD). Municipalities issue bonds to raise money from savers willing to lend them money for a certain amount of time to make public investments in their cities and towns. When you buy a Belmopan City Council (Bmp Citco) Bond, you are lending to the Belmopan Citco. It promises to pay you a specific rate of interest during the life of the bond and to pay the principal also known as the face value of the bond when it matures or becomes due. The Bonds have 13 individual tranches with maturities from two to 14 years.
Since the mid of last year the Belmopan City Council has been marketing the bonds to investors, but is now opening the bond to the public to reach 100% registration. Also, since January of this year the Belmopan City Council has been locking it’s $50,000.00 government of Belize subvention in a sinking fund at Heritage to repay bondholders.
According to Mayor Khalid Belisle, proceeds from the bonds will be used for infrastructural improvements such as Cohune Walk Phase One, Belmopan Heights Phase One, the BTL Housing Area, the Hummingbird Avenue at the South of the City as well as other areas. Funds from the bonds will also be used to retire an inherited loan facility from the Holy Redeemer Credit Union.
With the bonds to be managed by Legacy Fund Limited, Ervin Perez explained to the media that the minimal investment size of the bond is structured at a thousand dollars. Perez is encouraging the small mom and pop retail investor to participate as institutional investors tend to buy in the hundreds of thousands and millions.
Perez says, “The structure of the bond also looks at different time horizons. You may be somebody who wants for say two years or three years – there are two year tranches. You get a lower interest rate at three point five percent, but it is much larger than what you would get at the average saving rate at the bank. And then if you have a long term savings need – ten or fourteen years – there are the longer tranches that pay seven point two-five percent. At all times these bonds pay semi-annually, so every six months you get the interest income.”
The fiscal agent for the municipal bond is the Heritage Financial Limited and Stephen Duncan from that grouping is confident about the future prospects of the bond.
“As we did the numbers and were looking at the figures as a part of the analysis and the assessment of what is taking place, I am very comfortable that in fact the City of Belmopan will be able to service these bonds and it is for that reason we are pleased to be a part of what is happening. The amount that is already in the pipeline being discussed is very evident that people who want an alternative means of investment such as these bonds, need to make sure they hurry and buy it because some of the large companies and organizations and entities are looking to eat up the bonds.”
Information provided by the Belmopan City Council notes that in 2000, Belmopan was incorporated as a City and held its first city council election. Since its inception, the City’s population had continued to grow with a 64% growth rate over the last 10 years. This rapid population growth and business development have meant that the Council must deal with the quickly rising needs and demands for public works and services. While there have been significant private sector investment, the City has a public infrastructure deficit of approximately $20 Million. While the 6.5 million dollar bond does not close the growing $13.5M infrastructure gap, it slows the growth.
Belizeans now have another investment avenue that offer competitive interest rates of return, for both the short and long term. Mayor Belisle has indicated that large investors have taken up approximately 2.7 million dollars of the bond, representing about a 40% of the total offering.
When sold out, the bond interest will be paid every six months on February 1st and August 1st of each year.
