Central Bank issues new bond on behalf of Curacao

POSTED: 01/12/15 10:16 PM

Willemstad – On Tuesday, January 20, 2015, there will be a sinking bond issue on behalf of the country of Curaçao, the Central Bank stated in a press release yesterday. A bond issue that is backed by a fund, called a sinking fund, sets aside money on a regular basis to ensure investors that principal and interest payments will be made as promised. Sinkable bonds reduce the risk for investors and therefore enable the issuer to pay a lower interest rate on the sinkable bond being issued. Companies are required to disclose to investors their sinkable bond obligations through their corporate financial statements and prospectus.

A sinkable bond issuer is required to buy a certain amount of the bond back from the purchaser at various points throughout the life of the bond, at a set sinking price. Issuers set aside money in their sinking fund to repay the money owed based on the bond’s par value. If interest rates fall below the nominal rate of the bond, sinking fund provisions can allow the company to repay all or part of the amount owed, and refinance the remaining balance to the lower rate.

The bond for Curacao will have a semi-annual coupon as follows: 1.60% sinking bond with a duration of 30 years. On Monday, January 12, the Dutch State Treasury Agency (DSTA) will be able to subscribe and up to Tuesday, January 13, 10:00A.M.  the general public will be able to subscribe to this bond issue at all commercial banks in Curaçao. Subscription will take place according to the tender system in which parties indicate for which amount and price they wish to participate in the loan, thereby revealing their desired yield.

After the closing of the subscription, the Central Bank of Curaçao and St. Maarten will publish the price of issue. Parties that have subscribed for a higher price than the price of issue will receive full allocation. Parties that have subscribed at a price equal to the price of issue will receive the remaining amount of the issue. As of January 7, 2015, subscription forms can be obtained free of charge at the commercial banks and can be downloaded from our website www.centralbank.cw/prospectus-loans-curacao

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