If you follow the news, you'll know all about the municipal bond launched by the city council in November of 2012. 20 million dollars of those bonds sold like hotcakes - mostly because the banks are offering very low interest rates on savings. That means individual investors and institutional investors have money but they don't have anywhere to put it. The banks are only offering 2% at most so when the municipal bond came along offering 3.5%, 5.5.% and 8%, well investors jumped at it.
NOW Saint Catherine's Academy is hoping it can do the same. Now you may say, what's a school doing selling bonds? Well, they're making history. We found out more at the launching today:..
Ervin Perez, Legacy Fund Ltd.
"This is the first educational institution in the English speaking Caribbean; we are talking Barbados, Trinidad, Jamaica - all the eastern Caribbean - this is the first institution that is issuing an education bond for capital investment. This is absolutely historic. The purpose of the bond as Sister Mercy has spoken about is the artist rendition of a multi-purpose student center which will enhance student experience at this school and provide the school with opportunities and benefits that has been at this current time not available and the school St. Catherine's Academy, the board of governors have pledge for the security of this bond 7% of the gross revenue of the school which approximates to $172,000 for the first at least 3 years. So the school is saying instead of us going to bank, instead of you putting your money in the bank, 
let's make a mutually beneficial arrangement through a bond which is longer than 5 years which will offer you fix periodic stream on interest payments. In this case of the SCA Mercy bond - every 6 months you will be paid interest on the bond and at maturity 10 years, 20 or 25 you receive your principal payment. By doing this the school is able to achieve the goal of distributing the cost of the building over a portion of the benefits of the building - that 25 years. It's an very safe instrument for a number of reasons; the school has hired the service of a fiscal agent to manage and independently control what you called a sinking fund account and all that means is that on an annual basis the school will transfer the pledge amount in the first number of years that $172,000 to the account which is sinking agent which in this particular case Heritage Trust and Financial Services will use to provide the debt service and the principal payment when due. These are the kind of investments you want to make in terms of setting up your retirement plan, so you know that some point in your life you will stop working and you would want to live off your savings. For large institutions it's the same way, you have a pension plan and endowment fund, you know that 20-25 years from now a number of your employees will be retiring and you have to make pension payments. The question is can the school generate the surplus to debt service and as I show you in the very beginning of the slide, the school can save that money over 17 years and then they to build the building in 17 years or the school can save the money on an annual basis and pay back bond holders that have invested in the school to build its building, so all institutions have the opportunity of doing the same thing. traditionally what has happen in our country is that school have went to maybe the credit unions or the commercial banks or try to ask for a grant from the government to fund the investment. What St. Catherine's is doing is saying given the environment that we are in let's partner together. We are willing to give you something as an investor which is the interest income for the needed building that we will use to provide the better service for our students who then pay for school and government pays the school to provide the service."
Sister Mercy Cervantez, RSM - Sisters of Mercy
"We are not a profit making institution. So it's through hard work, through sweat and blood and generosity of all that have gone before us; all our peers, those who are present working today that have really built up St. Catherine's Academy for our young people, or young women, for the people and country of Belize."
The bond was officially launched for sale today and the offer closes at the end of October. The school hopes to raise 2.85 million dollars for the SCA Multi-purpose Student Center by offering 2,850 bonds at one thousand dollars each. So that means the minimum buy in is one thousand dollars. The offering has three series of bonds, 10 years, 20 years, and 25 years. The interest rates are 4%, 5%, and 6% and 25 years 3 series different maturities, 10 years, 20, and 25 years.
IT is open to any investor who has a minimum of a thousand dollars and you can find out more by visiting the Heritage Bank Limited Website and the Legacy Fund Website.
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