I am not giving inaccurate information – Eustace

Leader of the Opposition Arnhim Eustace is standing by his statement that the $40 million bond issue floated by government in 2012 was undersubscribed.{{more}}

Eustace had been asked to make a correction by Prime Minister Dr Ralph Gonsalves, who in a January 21 letter to the Leader of the Opposition stated: “I write concerning a matter on which you uttered a falsehood in one respect and at least a reckless misrepresentation in another, arising from your recent Budget Speech delivered on January 15, 2013.

“This matter goes beyond spin, mistake or misrepresentation of which there were many in your speech, and which have been and are being addressed by thoughtful Vincentians at home and abroad.

“Clearly from the facts at hand, you knew that you were speaking a falsehood deliberately in one regard and in another you appeared reckless as to whether you were uttering a falsehood or misrepresentation,” Gonsalves included in the letter.

Eustace in his contribution to the Budget debate last week said that despite the prime minister’s claim that the bond issue was oversubscribed, this was not the case.

He said that Gonsalves was the first in the country’s history to float a bond issue that was undersubscribed.

“Just yesterday, the prime minister claimed that the bond issue was oversubscribed, but listen to the words of the First Citizens Bank in the document ‘Caribbean Investment IQ’,” the Leader of the Opposition said.

He proceeded to read from the document. However, the prime minister stated in his letter that Eustace either failed or refused to quote accurately from the publication to which he had referred.

Reading from the publication, Eustace said “The sole undersubscribed position resulted from a St Vincent auction held on January 4, 2012. The issue closed short EC $388,000.”

However the entire quote read: “On the Regional Government Securities Market (RGSM) fourteen 91-day Treasury Bill issues, two treasury bonds, and one corporate note were auctioned. All but one of the T-Bills auctioned closed with oversubscribed positions with the more recent ones in April closing heavily oversubscribed for St Lucia and St Vincent, with bids amounting to more than twice the issue sizes. The sole undersubscribed position resulted from a St Vincent auction held on 4 January 2012. The issue closed short XCD388,000, but still managed to close at 5.5%, below the maximum discount rate of 5.82%. This was as a result of the market moving to secure allotment in anticipation of late bids which failed to materialize….”

The prime minister’s letter further indicated that there was no bond issue of the Government on January 4, 2012, but there was one in April 2012.

“There was on 4th January, 2012 the usual 91-day Treasury Bill of EC$25 million issued by the Government of St Vincent and the Grenadines which was unusually undersubscribed because it was placed on the RGSM on the day after the New Year’s Holidays in 2012; thus, and some of the regular investors in our Treasury Bills were unprepared and did not participate,” the letter stated.

Gonsalves continued that it was “evident to any normal literate person not stuffed with political jaundice that the quotation from the publication used by you was referring to Treasury Bills and nothing else. How did this become a Bond issue? In any event the Bond issue was in April, not January 2012!

“The entire quotation detailed by me above points to the fact that the Treasury Bills issued by the government were, but for the peculiar issue of 4th January, 2012, heavily oversubscribed and at favourable interest rates. Indeed the recent Treasury Bills of the Government of St Vincent and the Grenadines in December 2012 and January 2013 were highly oversubscribed and at rates of 3.25 percent.