POINTE BLANCHE--St. Maarten Harbour Group of Companies through its agency AIC has completed a bond loan of US $110 million successfully, according to the Central Bank of Curaçao and St. Maarten (CBCS).

A total of $150 million is needed, of which $80 million is to refinance the existing loan for the expansion of the cruise facilities and the rest is for the proposed causeway across Simpson Bay Lagoon, pier repairs and supplementary provisions.

Harbour Group of Companies shareholder's representative Deputy Prime Minister Theo Heyliger said on Wednesday that the bond issue was helping to remove the high interest rate of more than seven per cent it pays to RBTT Bank (now Royal Bank of Canada) on its loan. The bond also reduces the tenure of the loan, freeing up assets and funds sooner for continued investment in the country's cruise tourism product.

Heyliger said it was time St. Maarten benefited from there being a joint Central Bank of Curaçao and St. Maarten, pointing to similar bonds issued to Curaçao-based companies over the years. That country's utilities company Aqualectra has a bond of more than NAf. 350 million, predominantly financed by the Central Bank.

Some 60 per cent of the harbour bonds have been bought by local commercial banks and insurance companies, according to Heyliger. "The bond is continuing to be sold. The objective is that 100 per cent of the bond be sold locally, so nothing is left on the books of the Central Bank."

Once that happens, St. Maarten can be proud that "we have been able to get into our own capital market, which is investing locally into bonds. This is something I hope will have a spreading effect into other bond areas," Heyliger said.

Another bond that may come on the market soon is that of Princess Juliana International Airport's loan.

Bond details

The Central Bank stated in a press release issued on Tuesday, "On the basis of the authorities deriving from its bank statute and the investment policy established by the Supervisory Board, the Central Bank in line with its existing policy has decided to also, with this bond issue, offer a so-called 're-purchase facility' to all entities that bought bonds during the issue. This means that the Central Bank, if so desired, is prepared to later buy them back for the emission price, at all times.

"This policy also serves to promote the further development of the local capital market and stimulate that the institutional investors can invest locally at an attractive interest rate, within the investment rules established by the Central Bank."

Considering the developments in the balance of payments and the effectiveness of the instruments used up to now, the Central Bank sees the purchase of these types of bonds as an effective way to absorb the current over-liquidity, which ultimately benefits the balance of payments.

"It is so that St. Maarten is coping with a shrinking economy and a reducing issuing of credit. With this bond emission, the institutional investors, including the pension funds, get a possibility to invest with an attractive interest in the relatively small-scale area, where there are usually not many investment options."

The term for inscription ended on Tuesday, at US $115 million. Interested parties can always still buy these bonds via the secondary market and the Central Bank.

The Central Bank is also working with the staff of Curaçao's Minister of Spatial Planning Charles Cooper for the emission of a bond loan valued at NAf. 250 million, to raise that island's infrastructure to a higher level and address a big backlog in that regard, within a few years.

Lagoon causeway

Heyliger said the causeway across Simpson Bay Lagoon was an "election promise" that would be kept – more so because traffic studies have shown that it is needed. The finalisation of the financing of the causeway is being worked on, now that the bond has been issued.

Contract negotiations with the main contractors are also ongoing. He hopes the contract will be signed shortly.

The project still needs to be presented to Parliament formally for approval.

Environmental groups have insisted that they are not in favour of the causeway, but should the project be pushed through they demand that the ecologically rich area of the lagoon called Mullet Pond be formally protected.

Heyliger said that when the initial environmental impact study had been carried out, the idea for the bridge project had been to claim more land and to make space available for sewage treatment plants to tackle the runoff that plagues the lagoon.

"When we did the environmental impact study and it was shown that there were mangroves and aquatic life in that area, we decided not to fill in that part of the lagoon," he said. This led to a revamp of the design that would put the causeway on piles in that area.

"The issue of Mullet Pond will also be studied. We need to make sure before we make any impact or designate any particular area. The proper study has to be done," he said.

Meanwhile, another environmental impact study is being carried out for the overall lagoon, to identify the real pollutants and decide how to eliminate them.