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Opposition’s negative pursuits

Sunday, July 8, 2018

When opposition to Government’s initiatives lacks facts and therefore truth, then such pursuits eventually gain no credits for public enlightenment and the performance of the opposers.

Such tactics are nothing less than exercises in public confusion and division. In the least, it is hypocritical when the opposers had a five-year chance to address the very problems of CLICO’s debt, crime, and economic diversification, which they now accuse the Government of failing to deal with in a time of two years.

Why would the Opposition brand the proposed National Investment Fund (NIF) bonds nothing more than a Ponzi scheme and a Trojan horse that will “destroy the investor?” Admittedly, Government’s policies are fair game for anyone, so it should be in a democracy, and one would be naïve to believe that political players care about truth if in the scheme of things the word opposition has become a synonym for negativism.

True, patriotism shouldn’t be a factor when considering investing one’s money. The primary concerns should be the safety of capital and the ability of the investment to fulfil its objectives.

Based on available information, the NIF bonds would be well secured with attractive rates of return of 4.5 per cent on a $1,000 investment for five-year bonds, 5.7 per cent for 12-year bonds and 6.6 per cent for 20-year bonds.

These are not government guaranteed bonds, but corporate asset-backed bonds, and at first assessment, a valid concern is likely to be the offer of fixed-income returns on what are fundamentally underlying equities. The prospectus should address the path forward overtime to minimise the risks associated with such an investment product.

All investments carry risks, nothing unusual about that.

On other fronts, the Government is the butt of endless criticism concerning rising crime and the lack of economic diversification.

In principle, that is a fair situation given its political platform promises. Diversification is imperative.

Like many small countries, our tax base is inadequate to meet the cost of public administration and services, but is it reasonable to expect a government in office for just over two years to have diversified the economy such that new initiatives would have picked up the financial shortfalls resulting from the fall in energy prices? Is that the Government’s role or should its purpose be to facilitate the process of diversification driven by the private sector?

There is a price to pay for being a small island. Most such states have characteristics that pose challenges not easily overcome like the narrow tax base just mentioned, and a dearth of specialist skills more so when it comes to the specialisation that robust diversification strategies and modern technologies demand.

Factor in our relatively high labour costs and production capacity to achieve export scale. If, however, in our case, billions of dollars weren’t siphoned away through corruption and instead were put to productive use in economic diversification, crime detection, and other productive strategies we would have been in a better position today. That is raging water under a broken bridge that the Government has to deal with while it grasps present opportunities, strive to fulfil its manifesto promises, and do things differently if the future is to be different.

Getting back to the NIF bonds, we await the Prospectus for detailed information. Without a government guarantee, the credit risk will depend primarily on the quality of assets underlying the bonds. These are shares of Republic Financial Holdings, Angostura Holdings, WITCO, One Caribbean Media, and Trinidad Generation Unlimited.

The initial credit ratings by the Caribbean Information and Credit Rating Services of Cari AA (local currency rating) on the regional rating scale and ttAA (on the T&T national scale) to the proposed NIF Bond are helpful. These ratings indicate an investment grade quality.

The NIF would be holding assets totalling over $7.9 billion covering bonds totalling $4.0 billion, which should be added comfort to investors. The bonds are aimed primarily at institutional investors who are sophisticated enough to make investment decisions.

Is it wishful that opposition politics can become truthful moments in learning instead of continued negativism?


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