The Tunisian central bank closed July 16 on its offering of a $485 million sovereign bond that is guaranteed by the United States.
The closing marks the conclusion of an accelerated process that U.S. Treasury Secretary Tim Geithner and Tunisian Finance Minister Houcine Dimassi affirmed on April 20, when they signed a declaration of intent committing both sides to proceed as quickly as possible on this program. The U.S. guarantee strengthens the government of Tunisia’s ability to manage the transition to an economically sound and prosperous democracy, the U.S. Treasury said in a press release.
The U.S. government is committed to helping Tunisia build an economic foundation that supports sustainable and inclusive economic and job growth, bolsters international confidence in the Tunisian market, and expands U.S.-Tunisian economic relations, the U.S. Treasury said.
The $485 million, seven-year Tunisian sovereign bond was supported by a 100 percent guarantee of the repayment of principal and interest by the U.S. government. It is the first time the country has tapped international bond markets since 2007.
With greater access to international capital, the Tunisia government will be able to provide its citizens with critical services, including job skills training, education and programs that help banks provide financing to small businesses, the Treasury said.
“We welcome today’s $485 million bond issuance by Tunisia, an important milestone in its efforts to re-enter the international capital markets and advance its democratic transition,” said Lael Brainard, under secretary for international affairs at the U.S. Department of the Treasury. “This U.S.-backed issuance demonstrates the U.S. government’s commitment to help restore Tunisia’s economy and supports the Tunisian government’s effort to finance key development goals at affordable rates, which is vital to its economic and political transition.”
“Securing a successful transition to democracy in Tunisia with a strong economic foundation will set a clear example for other democratic transitions underway in the Middle East and North Africa region, and I cannot overstate its importance to the United States,” said Mara Rudman, assistant administrator for the Middle East Bureau at the U.S. Agency for International Development (USAID), who signed the loan guarantee agreement in Washington on June 8 with Tunisian Ambassador Mohamed Salah Tekaya.
The U.S. Congress authorized the Tunisia loan guarantee program in December 2011. The $485 million issuance was priced at a coupon rate of 1.686 percent.