Dear Editor,
The recent media reports of GuySuCo’s urgent requirement for an additional G$3B dollars on top of $3.1B already borrowed suggests that this corporation needs a method of financing that is long-term and sustainable.
Such a method of financing exists − the corporate bond. There are billions of dollars of excess liquidity in the banking system earning interest rates well below the level of inflation which see savers’ deposits being eroded in real terms year after year.
When faced with the potential to earn 8-9% compared with the low rates currently on offer I am sure many savers would seriously consider an investment.
Liquidity considerations can be addressed by listing the bonds on the stock exchange operated by the Guyana Association of Securities Companies and Intermediaries Inc (GASCI); the rulebook already provides for the listing and trading of bonds.
Of course some concessions would be needed in order to make such a bond issue a reality.
First GuySuCo would need to file as a Reporting Issuer under the Securities Industry Act, with the governance and disclosure requirements this entails.
Secondly, the government would need to guarantee the bond issue.
Now that Guyana has graduated from its IMF programme there should be no impediments to offering such a guarantee.
Finally, a well laid-out prospectus, accessible to the average Guyanese, will be needed setting out the risks and rewards of investing in the issue.
Barring the unthinkable options of privitisation or closure, the alternative, which is to prop the business up with tax payers’ money, is both short-termist and is ultimately diverting funds urgently needed for other areas of national development.
Yours faithfully
Patrick van Beek
