Good response to BNOCL bonds

THE FIRST THREE SERIES of a $160 million bond being issued by Barbados National Oil Company Limited (BNOCL) is almost fully subscribed.BNOCL’s acting general manager Winton Gibbs told BARBDAOS BUSINESS AUTHORITY that the first of the five-series issue was released during the first quarter of this year.He said the funds would cancel BNOCL’s $125 million bank overdraft and replenish its working capital, which was compromised by$200 million for subsiding petroleum products under the last Barbados Labour Party administration during the period of high oil prices.Barbados National Bank Trust Company was arranging the bond issue in collaboration with the Central Bank of Barbados to ensure that the demand for Government bonds and Treasury notes was not weakened, he said.“The response has been very good, but we are still working through the Central Bank not to put pressure on its treasury bills. Series five, four and three are already on the market and almost fully subscribed,” Gibbs said.He pointed out that series five, the first lot of the bond issue, was a ten-year, US$20 million debt investment for investors who would be repaid 7.25 per cent per annum.Gibbs, who was finance manager of BNOCL from 1998 to 2009, noted that the size of the bond issue prompted the oil company to target “institutional investors that have need for medium-term investments”.Moreover, the acting general manager vouched for the present financial health of BNOCL, saying that the company was sound in spite of an extended overdraft and diminished working capital.“Having an overdraft does not suggest that a company is weak. Cash at bank is not a profitable resource. And our audited financial statement for the year ended March 2010, which will be released shortly, will show a reversal in shareholder deficit – from $44.67 million to a surplus between $4 million and $5 million,” Gibbs said.