Evolving U.S. Interest Rates Affect Trinidad & Tobago’s USD Refinancing Outlook

Evolving U.S. Interest Rates Affect Trinidad & Tobago’s USD Refinancing Outlook

September 18, 2026

Dave Dookie, Chief Executive Officer

• U.S. interest rates remain elevated, with the 10-year Treasury yield approaching 5% and the 30-year above 5.3%. Higher rates are increasing borrowing costs, pressuring bond prices and creating a higher valuation hurdle for U.S. equities.

• Trinidad & Tobago faces higher USD refinancing costs because international borrowing is generally priced relative to U.S. Treasury yields plus a credit spread. Government and state enterprise refinancing could therefore require higher coupons and greater emphasis on maturity selection and liability-management strategies.

• Global equity performance was mixed. The Dow declined 1.69%, while Nasdaq gained 0.72%. UK equities were broadly stable, European markets weakened, and Asia was mixed, with Japan and China advancing while Hong Kong declined.

• Trinidad & Tobago equities had a positive week, with the Composite Index gaining 1.27%, although First Tier trading volume fell sharply to approximately 1.04 million shares. Banking system liquidity remained relatively comfortable, with excess reserves increasing to approximately TT$4.12 billion.

• Trinidad & Tobago’s longer sovereign bonds yielded approximately 6.3%, compared with Jamaica at roughly 5.9%, Barbados’ 2035 near 6.8%, and various Dominican Republic maturities around 6.0%. NGC’s 6.05% 2036 bond offered a yield of approximately 6.8%, illustrating the additional financing premium facing state enterprises.

U.S. interest rates have moved decisively higher, creating a more challenging backdrop for global financial markets as 2026 approaches its final quarter. We observed the U.S. 2-year Treasury at 4.75%, the 10-year at 4.99%, and the 30-year at 5.3%, while SOFR was approximately 3.85% overnight. Investors increasingly appear to be accepting that U.S. monetary conditions could remain restrictive for longer, particularly if inflation proves persistent. Higher risk-free rates raise borrowing costs for households and corporations, compress equity valuations and make Treasury securities more competitive with risk assets. Nevertheless, U.S. equities have remained comparatively resilient, supported by expectations that artificial intelligence investment will continue to drive corporate earnings.

For Trinidad and Tobago, the more important consequence is the effect of elevated U.S. Treasury yields on USD denominated sovereign and state enterprise refinancing. International borrowing costs are effectively built from the U.S. Treasury curve plus a credit spread; consequently, a 10-year Treasury yield approaching 5% creates a materially higher base cost before any Trinidad and Tobago sovereign or corporate risk premium is added. This is already evident across the regional bond market, where medium and long-term

Trinidad and Tobago USD sovereign yields are above 6%. State enterprises face an additional spread, the National Gas Company’s 2036 bond, for example, is yielding around 7%. If U.S. rates remain elevated, upcoming refinancing by the Government and state agencies could therefore require higher coupons, shorter maturities, liability management transactions or other structures designed to contain debt service costs. Domestically, persistently high U.S. rates may also limit the scope for substantially lower Trinidad and Tobago interest rates because of the need to preserve the relative attractiveness of TT dollar assets and manage foreign exchange pressures.

Global Equity Markets

U.S. equities were mixed over the five trading days. The Dow Jones declined 1.69%, while the Nasdaq Composite gained 0.72%. Technology remained comparatively resilient, with Nvidia rising 1.82% and Alphabet 3.26% over five days, although the market continues to balance strong AI-related earnings expectations against higher discount rates. The strong Thursday session in which the S&P 500 gained 1.1% and the Nasdaq advanced 1.7%, illustrating investors' willingness to return to growth stocks despite the higher-rate environment.

In the United Kingdom, the FTSE 100 was essentially unchanged, gaining 0.08%, while the FTSE 250 rose 0.96%. Continental Europe was weaker; the STOXX Europe 600 fell 0.57%, Euro Stoxx 50 declined 1.41%, Germany’s DAX lost 1.03%, France’s CAC 40 fell 1.40%, and Italy’s FTSE MIB declined 1.84%. European markets continue to face pressure from higher global yields and fiscal concerns.

Asian markets were mixed. Japan’s Nikkei 225 gained 1.57%, even as the Bank of Japan raised its benchmark rate by 25 basis points to 1.25%. The Shanghai Composite advanced 0.61%, while Hong Kong’s Hang Seng declined 0.22%. Australia’s ASX 200 was virtually unchanged, slipping 0.11%.

Trinidad & Tobago Equity Market

The Trinidad and Tobago equity market recorded a notably positive week. The Composite Index rose 1.27%, the All T&T Index gained 0.44%, and the Cross Listed Index advanced 3.58%. Trinidad Cement led the market with a 12.35% increase, followed by CIBC Caribbean at 7.81% and Massy Holdings at 6.06%. However, trading activity fell sharply; First Tier volume declined 94.52% to approximately 1.04 million shares, while aggregate trade values dropped 89.39% to TT$10.67 million. Banking system liquidity remained comfortable, with excess reserves rising by approximately TT$471 million to TT$4.12 billion.

Caribbean USD Bonds

The higher U.S. Treasury curve is increasingly visible in Caribbean USD bond yields. Trinidad and Tobago’s 2030 sovereign was offered around 95.60, yielding 5.82%, while the 2034, 2036 and 2038 bonds were offered around 100.45, 100.45 and 97.65, yielding approximately 6.32%, 6.43% and 6.49%, respectively.

Jamaica’s bonds remained relatively steady, with the 2036 bond trading around 119.00 and yielding approximately 5.85%, while the longer 2039 and 2045 bonds offered yields of about 5.85% and 6.37%. Barbados also remained stable, with its 2029 bond yielding around 5.90% and the 2035 bond approximately 6.83%. In the Dominican Republic, the 2030 bond was priced around 95.55, offering a yield of about 5.98%, while the 2036 bond yielded approximately 6.52%. Overall, regional bonds continued to provide yields in the 6% range, with higher yields generally available on longer-dated maturities.

Trinidad and Tobago NGC’s 6.05% 2036 bond, quoted around 92.75 bid to 94.75 offer, with an indicative offer yield of approximately 6.82%. The discount to par and yield premium over comparable sovereign debt illustrates the increased refinancing hurdle facing state enterprises in the current global rate environment. Until U.S. Treasury yields retreat materially, international USD financing for Trinidad and Tobago is likely to remain considerably more expensive than during the low-rate period, making timing, maturity selection and active liability management increasingly important.

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