Central Bank of Barbados officials are about to find out the extent to which Barbadians are keen to invest in Government paper.
Today, a $100 million Government debenture and a $25 million Government treasury note will hit the market simultaneously for subscription by investors, with both of them due to be issued on Wednesday.
News of this came in an announcement from the Central Bank which said the offers were open to residents and non-residents.
“The debenture will be issued at par with a fixed interest rate of 7.25 per cent payable on June 30 and December 31 of each year. The interest due to pensioners 60 years and over residing in Barbados will not be subject to withholding tax,” the bank said.
“Non-residents seeking tax exemption must satisfy the Commissioner of Inland Revenue of their status before exemption is granted. However, for all persons resident in the island, the interest from these debentures will be taxed separately from other income at a rate not exceeding 12.5 per cent per cent. These debentures will be repayable at par on December 31, 2029. The issue will remain open until the Central Bank advises that it has been fully subscribed.”
Withholding tax
In the case of the treasury note, the bank said this “will be issued at par with a fixed interest rate of 4¼ per cent payable on June 30 and December 31 of each year”.
As with the debenture, the interest due to pensioners 60 years and over residing in Barbados will not be subject to withholding tax and non-residents seeking tax exemption must satisfy the Commissioner of Inland Revenue of their status before exemption is granted.
All people resident here will also face a similar 12.5 per cent tax separate from other income, and the notes will be “at par on December 31, 2016”.
Local investment company Fortress Fund Managers Limited recently advised investors to be cautious and noted that investments in Barbados and Jamaica, including Government instruments, were not giving the best returns.
“We continue to see a wide divergence between performance of international markets and those in the Caribbean, especially in Barbados and Jamaica. During the quarter, the fund’s regional Caribbean investments were mostly flat or down while investments in international markets generally showed positive results. The combined effect was a small gain for the overall portfolio,” it said in a quarterly report. (SC)
