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Bond Market Battle

Sep 1, 2004

Pointing to unused money in investors' portfolios and the unmet needs of smaller companies, Caribbean brokerage firms are gearing up to rival banks' bond business.

Bidding on bonds
Competition in the Caribbean's debt capital markets is about to heat up. Brokerage firms like Caribbean Money Market Brokers (CMMB) are hoping to prise some bond mandates away from the banks by establishing a real bond market in Port-of-Spain, the region's self-proclaimed financial capital.

Merchant banks - as investment banks are known in the Caribbean - owned by giants like RBTT and Republic Bank have always dominated what they call a bond business. But this resembles a private placement affair where banks underwrite a sovereign or corporate issue and sell it to a few favored institutional investors. The process of competitively bidding for a mandate, setting price guidance, building a book and then allocating it to as many institutional investors as possible is not the norm in Trinidad.

There is little secondary trading. There is too much money chasing too few issues, so bondholders are largely buy-and-hold...

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