by Linda Straker
- Grenada has traded millions on securities market
- Maturities of securities currently range from 91 days to 10 years
Despite the financial challenges that were created because of the global Covid-19 pandemic, the regional market for the trading of debt instruments of the member states of the Eastern Caribbean Currency Union (ECCU) remained relatively stable for the financial year ending March 2021.
The Regional Government Securities Market (RGSM) was established in November 2002 and operates on a fully electronic platform. The instruments on the RGSM take the form of Treasury bills and Bonds and have varying maturities. These securities are backed by the full faith of the governments of the issuing member states.
“The performance of the RGSM remained relatively stable as annual fundraising managed to exceed EC$1.0 billion for another year, resulting in a 7.8% increase in the cumulative value of total funds raised on the RGSM from inception to date,” the financial report of the Eastern Caribbean Central Bank which was made public on 5 July 2021.
“The 5 participating governments navigated the uncertainties of the pandemic by deploying responsive investor relations strategies and continuing to satisfy debt service obligations, while actively accessing the market to fulfil short-term financing needs at competitively low rates, ranging from 1.5 to 4.3%,” said the report.
At the 43rd Meeting of the Regional Debt Coordinating Committee (RDCC) held on 29 October 2020, the Bank discussed strategies for developing a vibrant local currency bond market in the ECCU, underpinned by recommendations from the recent conclusion of a technical assistance initiative conducted by the International Monetary Fund in August 2020.
“Key areas for developmental reform include the primary market, investor base, secondary market, financial market infrastructure and the legal and regulatory framework.
The instruments on the RGSM take the form of Treasury bills and Bonds and have varying maturities. These securities are backed by the governments of the issuing member states. Grenada has traded millions on the securities market.
The maturities of these securities currently range from 91 days to 10 years. Treasury bills for all the members are often issued at a discount with maturities of less than a year. Bonds are coupon securities with maturities greater than a year.
During the financial year, the Bank according to the report continued to provide oversight, technical and advisory support to participating member governments to ensure stability and the proper functioning of the Regional Government Securities Market.
The Bank engaged in enhanced market oversight, surveillance and intelligence gathering activities noting the rising importance of the RGSM during the pandemic and underscored the need for preserving and maintaining market access for issuers and investors.
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