St Lucia is one of the few countries in the world to offer government bonds as an option to acquire citizenship at a discounted price against investments. It is a win win for CBI investors.
In May 2020, the Government of St Lucia (GOSL) introduced a special Covid relief bonds issued at minimum bid $250,000 as new option for citizenship by investment against the backdrop of Covid-19 pandemic. These special Covid bonds issued for limited time in US dollars, will be added to Consolidated fund which is used to finance capital development in the State and in particular, economic and social infrastructure.
These are zero interest bonds issued through GOSL debt management agency, which means the interest goes to government. If you take bond option to apply for St Lucia citizenship the hold period is minimum 5 years (families more), after that the bond sum is fully repaid by the government. The original bond certificate is issued to investors.
The Government of Saint Lucia will issue 5/6/7 year zero-coupon Government Bonds to prospective investors/applicants under the Citizenship by Investment Program (CIP). The Government of Saint Lucia shall be the registrar and paying agent for the securities. The amount of the investment will depend on the whether the investor is applying alone, with a spouse or otherwise as offered under the CIP.
The bond will be issued under the authority of the National Savings Development Bonds Act (Amendment) Section 3, Cap. 15.25, and by a resolution of Parliament No. 110 of July 6th 2020, which authorized the Minister for Finance to borrow monies for public uses of the state by the issue of securities.
|Name||Zero Coupon St Lucia Government Bonds|
|Amount of issues||USD 250,000
|Tenor||5, 6, 7 years|
To Assist with 2020/2021 debt re-financing
2025 (5 -year bond), 2026 (6 -year bond), 2027 (7 -year bond) The specific date in the year will be determined by the date which the investor purchased the Bond in accordance with their Bond Certificate issue date
The Principal will be repaid at maturity in, 2025 (5-year bond), 2026 (6-year bond) or 2027 (7-year bond) The Government of Saint Lucia is registrar and paying agent for the securities
|Issuer and Address:||The Government of the Saint Lucia (GOSL)
The Ministry of Finance, Economic Development, Growth Job Creation, Public Service and External Affairs Finance Administrative Centre
Pointe Seraphine, Castries
Saint Lucia (West Indies)
|Legislation||The Bonds are being issued under the authority of :
1. The National Savings and Development Bonds (Amendment Act), Chapter 15.25 of 2005 and by resolution of Parliament No 110 of July 6th 2020.
2. The Citizenship by Investment (Amendment) Regulations
|Currency||United States Dollars (USD) unless otherwise stated.|
|Minimum Bid||USD 250,000|
Why invest in Govt bonds?
Here are benefits of investing on bonds
- Investment is fully refunded after 5 years without interest.
- Guaranteed by Government of St Lucia
- Cheapest way to acquire passport for families (net costs are low)
- Citizenship is permanent comes with voting rights.
- Tax free benefits in Caribbean.
It is important to note if you apply for citizenship, that bond sum can be subscribed or paid, only after pre-approval, subjected to clearing all background checks, which takes 3 months processing timeline. Another 2 weeks for the issue of SL passports.
On top of the bond investment, you will pay US$30,000 Government processing fees (reduced from $50,000) for issuing bonds. The CIP Application fee is waived but you have to bear due diligence costs done by GOSL.
For example if you are single applicant, the total costs paid to government come down to $287,500 (there is also licensed agent fee). Since the $250,000 is refunded, you only pay for citizenship is only $37,500.
How get finance bonds?
If you dont have $250,000 to invest, another clever option is finance or loan the bond sum from an investment broker or bank. You will have to bear the interest rate (3%-4%) for the bond period. Please check with your bank or investment broker for financing. There are additional costs $30,000 processing fee plus $7500 due diligence and lawyer fee.
Important: St Lucia will issue bonds will only open until Dec 31, 2021 after this, the window closes.
Covid Relief Bonds
Here are the list of GOSL bonds issued for Covid relief
|Covid Relief Bonds||Minimum||Investment period|
|Single||USD 250,000||5 years|
|Two applicants||USD 250,000 (or)
|6 years (or)
|Five Applicants (Family)||USD 300,000||7 years|
|Additional dependents||USD 15,000||5+ years|
Any bond sum paid for additional dependents also refundable.
The bond can redeemed by citizen or authorized agents after the holding period. Citizenship is permanent is not withdrawn upon receiving back the bond sum.
Saint Lucia CIP
The CIP St Lucia is a very well run and highly reputable international citizenship program run by GOSL. It is built upon pillars such high integrity, transparency, efficient processing times, world class vetting mechanism, with only qualifying applicants are admitted into the program. The CIP does not accept investors from Iran and those who have criminal background and previous visa denials arising from UK and Schengen states.
The Saint Lucia passport is a well-respected travelling document across international borders. It is a passport that allows visa-free, or visa-on-arrival travel to more than 146 countries.
GOSL uses effective debt management strategy through the issue of securities and active government bond markets.
Let us understand a bit about sovereign default. Many clients who come to us ask what if St Lucia governments defaults.
To begin, first St Lucia has not defaulted on Sovereign debt unlike many other countries.
The Sovereign default is a failure by a government in repayment of its country’s debts. The Bankruptcy laws do not typically apply to governments.
St Lucia Credit Ratings
St Lucia has been rated by SWI (2021) as BBB-
Further the Caribbean’s credit rating agency, Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the assigned ratings of BBB- on its regional rating scale to several debt programmes of the Government of Saint Lucia. CariCRIS indicated that its stable outlook is premised on the expectation of strong construction activity and a partial recovery in tourism in 2021, and that debt to GDP would not breach the current rating category’s limit.
Many nations periodically do, default on their sovereign debt. This happens when the government is either unable or unwilling to make good on its fiscal promises to repay its bondholders. Countries are default on their national debts, pay high interest rates on borrowing eg. from IMF and other countries for bailout.
According to Fitch, 14 countries have defaulted a total of 23 times since the mid 1990s. Spain has defaulted six times in the history. There are other countries such as Russia, Venezuela etc. More recently in June 2015 Greece defaulted on a $1.7 billion payment to the IMF. Lebanon defaulted on US$1.2 billion in Eurobonds
The Worst case scenario is creditors of the state as well the economy and the citizens of the state are affected by the sovereign default. The immediate cost to creditors is the loss of principal and interest owed on their loans to the defaulting country.
The following scenarios can occur in a debtor state from a sovereign default:
- Banking crisis, as banks have to make write downs on credits given to the state.
- Economic crisis, as the interior demand will fall and investors withdraw their money
- Currency crisis as foreign investors avoid this national economy
The Debt/GDP ratio for 2020 remains at 82%. According, to Government report, The Central Government debt is the total public debt stock minus government guaranteed debt stood at $3,362.95M at end of June 2020
Important: Please understand the risks of investing in Government securities. The ultimate decision to invest relies solely on you. The above is general information and does not constitute investment advice.