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The ECHMB floats bonds in the capital market. These bonds offer a tax-free return to investors. The proceeds from the sale of bonds are used to purchase mortgages on a wholesale basis from Primary Lenders. In exchange the Primary Lenders (commercial banks, mortgage finance companies, insurance companies, development banks, co-operatives and credit unions) are given cash. These financial institutions in turn make the funds available for further mortgage lending. As at 30 September 2009, ECHMB has $208.1 million in outstanding tax-free bonds in the regional capital market.
The Bonds are held by institutional investors and individuals domiciled in the various member countries and beyond. Currently, the Bonds carry maturity periods ranging from two (2) years to fifteen (15) years.
In light of its mandate to make mortgages more affordable, it would be imprudent and defeating of purpose for ECHMB to place its Bonds on the market when the rates are high. Accordingly, ECHMB has had to reinforce the credit quality features of its Bonds as a means of sustaining its place in the capital market. ECHMB has also had to institute specific features in its Bond to effectively manage interest rate risk, which has resulted in continued reduction in its cost of borrowing.
In accordance with the reduction in the cost of borrowing on the capital market, ECHMB has been able to lower its benchmark lending rate to about 6.0%, which is comparable with what currently exists on the market among the deposit taking institutions. At the same time, ECHMB has been able to build partnerships with institutions to fund mortgages at more affordable rates for the benefit of consumers.
SCHEDULE OF OUTSTANDING BOND ISSUES (as at September 30th, 2009)
|
ISSUE
|
BOND
|
MATURITY DATE
|
AMOUNT
|
|
Fifth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2014
|
June 2014
|
$ 11,300,000
|
|
|
Secured Fixed Rate (Tax Free) Bonds Due 2010
|
June 2010
|
$ 6,150,000
|
|
Eleventh Issue (S3)
|
Secured Fixed Rate (Tax Free) Bonds Due 2013
|
June 2013
|
$ 5,300,000
|
|
Twelve Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2010
|
July 1, 2010
|
$ 43,455,000
|
|
Thirteenth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2011
|
September 1, 2011
|
$ 6,700,000
|
|
Fourteenth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2012
|
September 30, 2012
|
$ 18,770,000
|
|
Fifteenth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2012
|
June 30, 2012
|
$ 6,450,000
|
|
Seventeenth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2009
|
February 20, 2013
|
$ 16,205,000
|
|
|
Secured Fixed Rate (Tax Free) Bonds Due 2009
|
March 26, 2011
|
|
|
Eighteenth Issue (S2)
|
Secured Fixed Rate (Tax Free) Bonds Due 2009
|
August 26, 2011
|
$ 27,243,300
|
|
Nineteenth Issue
|
Secured Fixed Rate (Tax Free) Bonds Due 2009
|
July 2, 2011
|
$ 41,560,000
|
|
TOTAL
|
|
|
$208,133,300
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