New push to boost investment in bonds
MANAMA: A new initiative that allows more people to invest in Bahraini government bonds aims to raise $20 million by the end of the year.
It was unveiled by Takaud, a savings and investment company, and allows investors to pay BD30 a month – with an anticipated return of five per cent.
One of the aims of the Tawfeer Savings Plan is to enable people to make investments locally, rather than sending money abroad.
National bonds issued by Bahrain can cost as much as BD75,000 each, but the new Tawfeer product involves the company buying up bonds and then redistributing them to customers in smaller increments.
“As a Bahraini savings and pension firm, we have special pride in the strength of Bahrain,” said Takaud chief executive Luc Métivier.
“Bahrain financial instruments are now a key part of the investment options we make available to our local and regional clients.
“This is really something for Bahrain, if you travel the world this is something available in Germany, Poland, Morocco and so on.
“We buy it (bonds) in bulk and then divide and redistribute it. We have bought what we think is enough and, if necessary, we will buy more.”
Bonds are issued by the government to generate revenue, with the money paid back with interest on a specified date.
They are largely considered safe investments because it is assumed the government will not default on its obligations to international investors. Mr Métivier said the appetite for Bahraini debt remained strong, despite the country’s increased reliance on borrowing to fund its commitments in an environment of low oil prices.
“Look at the number of foreign investors in Bahrain,” he told a Press conference at the Four Seasons Bahrain Bay.
“Every time these bonds are put up for sale, they sell out within a few hours – usually to the international market.
“Why them (international investors) and not Bahrainis?
“In terms of how safe it is, how safe are US bonds right now?
“No-one knows how things can change, but this is a liquid investment and you can withdraw at any time and place it elsewhere if you think that’s what’s best.”
Takaud chief government business and communication director Ebrahim K Ebrahim explained that investors can choose to pay BD30 a month, or make lump sum investments.
“This plan is suitable for both Bahrainis and expatriates residing in Bahrain to invest in, instead of in companies and investments abroad,” he said.
“The Takaud bond strategy is a diversified portfolio of high-quality Bahrain bonds, treasury bills, money market instruments and sukuk.
“The plan and strategy are available to everyone and are designed to meet the needs of individuals and institutions seeking a steady return on investments over time.
“It aims to provide an average annual yield of five per cent.”
Takaud chief investment officer Johannes van der Dong said the company mainly invested in bonds due to mature in 2022.
“We have bought two government bonds at the moment, one that matures in 2022 and another that matures in 2028,” he said.
“Of the first we bought 75 per cent and 25pc of the latter, but we have a daily inspection of the bonds and we can always change and diversify what we’re investing in.”
