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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.
More information about the Bond Market can be found in the Public Education Pamphlet Series no. 4 entitled The Government Securities Market in Trinidad and Tobago.