Understand what bonds are and how they are issued. Learn about the primary and secondary markets, bond application procedure and authorized partners.
Central Bank’s Role in Issuing Government Bonds
What are Government Bonds?
A Government bond is an instrument used by governments to borrow money. It is one of the most secure types of investments available as the likelihood that the government will not repay its debt is very low. In Trinidad and Tobago, government bonds are issued for periods of more than five (5) years. During the life of the bond, the government pays interest to bondholders and the principal amount borrowed is returned either at the end of the period or over some specified period.
How are Bonds Issued?
Currently government bonds are issued through an electronic auction system at the Central Bank. An auction is opened for approximately two weeks. Information on the bond is documented in a Bond Information Memorandum which is published in the daily newspapers and posted on the Central Bank’s website. The purpose for the issue of a particular bond is explained in this document. The public can purchase bonds on a competitive or a non-competitive basis. You can learn more about the bidding process in the Bonds Q & A.
Bond Markets
Explore the two main phases of bonds: Primary Market for issuance and Secondary Market for trading.
1. Primary Market: Initiating Government Bonds
The first-time issue of a government bond is known as the primary issue. The institutions and arrangements involved in this issue are referred to as the primary market.
2. Secondary Market
The ‘secondary market’ refers to the subsequent trading in these bonds, after their date of issue but before their maturity date.
Bonds Application Procedure
Applications to purchase bonds are made through Government Securities Intermediaries. Information can be obtained from The Reserves and Domestic Market Management.