by Linda Straker
- Treasury Bond GDN150224 on 14 February 2022 raised EC$10 million for Government
- Funds were used to refinance existing Treasury bills and notes
- Treasury bonds and bills can be bought and sold before they mature
Approximately 14 months after the auction of Treasury Note GDN150224 on the Regional Government Securities market, 50,000 units of that auction changed ownership on 28 April 2023. Treasury note GDN150224 is a two-year Treasury Bond auctioned on 14 February 2022 that raised EC$10 million for the Government of Grenada.
The funds gained from that auction were used to refinance existing Treasury bills and notes. One financial official explained that changing ownership before a bond matures is called secondary trading.
“One of the things about treasury bonds and bills is that they can be bought and sold by persons before they mature. This is called secondary trading. A current holder of a Treasury Bill who wants to sell it to someone can do so any time before the maturity date,” he said.
The Eastern Caribbean Securities Exchange provides a primary and a secondary market for trading securities. In primary markets, an issuer, a public company or a government, sells its securities for the first time to investors to raise capital to support its operations.
The funds generated from this sale of securities go to the issuer. In secondary markets, investors buy and sell securities among themselves. The proceeds from this trading activity go to the investors, not to the original issuer.
On the same day that units of the February 2022 treasury bond changed ownership, the Government of Grenada auctioned a 91-day Treasury bill on the primary market platform and raised EC$15 million.
“The competitive uniform price methodology used, resulted in a discount rate of 1.49441%,” said the weekly ECSE trading report for 28 April.
The Eastern Caribbean Securities Exchange (ECSE) is an electronic securities exchange that operates regional securities markets, in the Eastern Caribbean Currency Union (ECCU) of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines. The ECSE is licenced by the Eastern Caribbean Securities Regulatory Commission (ECSRC) under the Securities Act, uniform regional legislation governing securities market activities in the ECCU. The ECSE facilitates the buying and selling of financial products, including corporate stocks and bonds and government securities. It is the first fully electronic regional securities market in the Western Hemisphere.
