Home Belize City Council Central Government approves CitCo Bond

Central Government approves CitCo Bond

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The Belize City Council is attempting to increase their cash flow by floating a Municipal Bond, which is expected to meet some of their financial obligations. The Municipal Bond is expected to raise $6 million dollars in short-term securities structured over three instalments. Mayor Bernard Wagner says that the bill has already passed its first reading in the house and will now go to the Finance Committee to be vetted.

Mayor Bernard Wagner – Mayor of Belize City: “The new municipal paper is a new structure, it is a structure intended to access the secondary markets. You have these institutional investors who have funding; the banks aren’t paying the interest rate that any investment person would want. You know the banks are paying below 1% and our municipal paper will be paying interest rates in the area of 3% to 3.75% based on the term: three months, six months and one year. We started the process roughly about one year now to get this paper off the ground. I am pleased to say that we are in the final stages: in the last House Meeting the Bill was taken to the House by the Prime Minister, it went through his first reading so I think it is a win already for us given the fact that this Bill has Cabinet approval which is something historical in Belize’s history. Never before has a sit-in council that has different political persuasions than the Government in power has been able to reach across the aisle and have this type of collaboration where if successful the people benefit. The greatest incentive to the investor again is the rate of return on your investment; 3% in this day and age is substantial for any investor and again for the benefit of the residents it gives us at City Hall that leverage, better, it is smoothing out our cash flow so that we can provide better service for the people and we can also benefit in liquidating some of those other obligations that carry a higher interest rate. If you would go to a bank to borrow an overdraft we would normally access an overdraft at the bank in the area of 10% so what this bond does is it lowers our finance charges from 10% to 3% so you have a big cushion that gives you substantial savings. It is an I owe you in that: you have your funds, you come to subscribe to the offering, to the subscription and we will issue you a financial instrument which will say that the Belize City Council owes you x amount of dollars and is willing to pay you x amount of interest on this so we will give you an instrument and you give us the money. Every three months or every six months based on what you subscribed for we will continue to pay you that interest on those funds.”

Investors can expect a 3 % interest on their return.

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