Local bank to supply gov loan

| 13/04/2011

(CNS): FirstCaribbean International Bank (Cayman) Ltd has been awarded the contract to provide government with a loan of CI$155 million to meet its long-term financing needs, in respect of the 2010/11 fiscal year. Government has decided to take the full amount, which was approved by the Legislative Assembly last year, despite more recent indications that government may not need all of it now. In a release from the Ministry of Finance on Wednesday morning it was revealed that the loan will be over a 15-year period and the precise rate of interest will be established on the date that the loan funds are drawn by government and will remain fixed at that rate over the loan’s 15-year term.

The tendering process commenced and concluded with the review and scrutiny of the Central Tenders Committee (CTC), the ministry said.

“I have been informed of the outcome of the tendering process and from the information presented to me after the decision was confirmed by the Central Tenders Committee, I am satisfied that the government went through this process,” Premier and Minister of Finance McKeeva Bush said. "Cost minimisation is paramount to my government and me. The keenly competitive terms submitted in the bids demonstrates that the government of the Cayman Islands continues to be regarded as a high-quality sovereign.”

During the first round of tendering for the government loan last year the decision by the ministerial technical team, which was approved by the CTC, was understood at the time to be for FirstCaribbean. However, it was overruled by the premier in a controversial move, when he told the country he could get a better deal from the New York based firm, Cohen and Company, saving some $24 million, and that he could also get re-financing for Cayman Airways.

Nevertheless, in February Bush announced that the deal was off and said the 4.5% interest rate cap which the firm said it could get had not materialised. “Government has now been advised that the 4.5% Interest Rate Cap cannot be obtained at the price previously represented to government. The increase in the price of the Interest Rate Cap is of such magnitude that it would wipe-out the cost-minimisation advantage that had been agreed,” he told the people..

He said that government would now reconsider the need to borrow the full CI$155million because it was no longer expected to incur a deficit in this financial year.

Speaking in North Side this week, he said that government finances were still in good shape and that there would be an anticipated surplus at the end of this financial year of around $13 million. At the start of the financial year government has anticipated a deficit of more than $14 million.

The money which government will now borrow will be the last loan it will be able to access until the country’s finances returns to compliance with the Public Management and Finance Law. Although the money will be used to pay bills on government’s capital projects, it is understood that government will also need to pay back a temporary bridging loan which was arranged by Cohen and Co. The current outstanding amount is US$92.5 million but the interest rate and and fees for which, have not yet been revealed.

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Category: Politics

Comments (16)

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  1. Anonymous says:

    Why is it that no Cayman bank allows fixed rate mortgages and force you to pay it back in the most 20 years? Oh, I guess I forgot, not many of us need a $150M to borrow at any time..

    I wonder how many more homes will be foreclosed on now?

  2. A Canadian says:

    As a Canadian I am astounded that the Canadian Imperial Bank of Commerce, which owns FirstCaribbean International Bank (Cayman) Ltd, is agreeing to take on this risk. Canadian banks generally know better than to lend money into insolvent entities like Mac’s government, especially where it will only by pissed away on travel and parties. I only hope the CIBC has arranged to lay off some of this risk to other entities, because I don’t want this to reflect badly on the extremely proper operations of the Canadian banking industry when it all goes to hell, which it will.

  3. Anonymous says:

    All of the local Cayman mortgage holders are not good enough for the F.C.I.B. to guarantee a fixed rate for any number of years upon pledging their own homes as collateral. What kind of double standard is this?

  4. NON-PARTISAN says:

    Just want to know really what is being used for collateral???

  5. Michael Mouse says:

    "The current outstanding amount is US$92.5 million but the interest rate and and fees for which, have not yet been revealed."

    Now this might be fun!  Since First Caribbean have made the loan and the reason the details of the Cohen loan were not disclosed was it might prejudice loan negotiations, presumably now we can get information on all the details of the Cohen loan and everyone who managed to get a finder’s fee or other commission for that transaction.

    Of course the reason for not telling us about the costs of the Cohen loan were bogus – First Caribbean would have asked to see the loan as part of their due dilligence. 

    But opposition members – just don’t go asking tricky questions of Mac based on evidence that those who would not want the evidence used might not have consented to allow you to use it.  Remember the Speaker decided that free speech and open debate in the legislature was less important than shielding those who might have an interest in keeping relevant information out of a parliamentary debate.

    I would say "only in Cayman" but that would not be true.  The TCI was like this until recently . . . .

  6. Anonymous says:

    Idiots. Imbeciles. What is the difference in the interest rate obtained? This info is deliberately not disclosed. UDP messed up and are trying to cover up this costly mistake Ignoring first bid CIG lost chance for a lower interest rate and has to borrow At a higher rate (likely 5.25%) now that market moved on. For $155m borrowing, this adds up to nearly $1.4m. Add in the fees paid to Cohen for nothing See McKeeva, XXXX. At my job, if I screwed up a million dollar deal, I would be fired! McKeeva, you not the right man for this job. You are a dinosaur With old tired politics style of bullying and misdirection. Try so go sit down

  7. While You Were Out says:

    According to the Ministry of Finance Logic 101:

    "We could have borrowed 170 million. Therefore, we saved the Caymanian people 15 million."

  8. McCarron McLaughlin says:

    Ha Ha the Premier spit in the sky and Cohen falls in his face.
    Bravo hail to great leader!

  9. Anonymous says:

    Government has decided to take the full amount, which was approved by the Legislative Assembly last year, despite more recent indications that government may not need all of it now.

    What does need have to do with it? 14 Million creates the opportunity for something like 6 weeks of travel in style..

  10. Trueblood says:

    Wow!….one of the reason’s I stick to FCIB is its very sound financial backing. To be able to issue this loan says a lot….I will remain a loyal customer despite the very much needed improvement in their Customer Service. Gov’t should have gone this route from the get go as the offer was always on the table.

  11. Anonymous says:

    clear as mud…..

    • Anon says:

      Let’s keep demanding until we are told how much money went to Macs buddies at Cohen. More stuff done without CTC approval.

      • Chris Johnson says:

        I completely agree. Now we have the new loan there is no reason why we should not know about commissions on this ill advised venture. Wendy an FOI please.

        CNS: Anyone can do an FOI.

  12. Anonymous says:

    If this government would stop gallivanting around the world on our dime we would not need a loan !!!