The inaugural bond issue from the FNFA represents a major breakthrough for First Nations self-governance. The authority issued $90 million worth of 10-year notes, and found strong domestic and U.S. interest.
The First Nations Fiscal Management Act created a suite of organization April 1, 2006 designed to help First Nations develop financial and economic capacity. The First Nations Tax Commission is dedicated to developing a real property taxation system on reserves. The First National Financial Management Boards strengthens financial management systems on reserves and pools the borrowing request of First Nations. Some, 124 First Nations participate in the FNFMA regime.
The inaugural bond June 10th
is a first for the FNFA. The capital raised by the debenture will be used by 14 First Nations to build and make improvements to roads, water and waste systems, as well as improve power/lighting and public buildings. The Chair of the FNFA, Terry Paul and Chief of Membertou First Nation, Nova Scotia, called the issuance, “A great day for First Nations.”
“Far too many First Nations have been unable to access affordable capital on the financial markets, something all other governments in Canada take for granted when public financing is required…Today, First Nations have made a significant step forward as economic equals with other governments,” Paul said. “By pooling and working together, it is now possible for any qualifying First Nation, regardless of size or location, to access the capital markets and enjoy the benefits of an investment-grade credit rating.”
In March 2011 Canada provided the FNFA with $10 million to fund its Credit Enhancement Fund (CEF) which assists the FNFA in securing the best possible credit rating for the benefit of borrowing member First Nations. In fall 2013, the FNFA obtained an A3 credit rating from Moody's Investor Services. The FNFA allows borrowing members to access low-rate and long-term pooled borrowing that would otherwise be unavailable.
The debenture attracted strong interest domestically. But there was also institutional interest from the U.S. The confidence shown by the investment community speaks to the strength of the FNFA investor safeguards.
BC Regional Chief Jody Wilson-Raybould and Deputy Chair of the FNFA said that, "The significance of today's FNFA bond issue for First Nations, and indeed the country, cannot be overstated. First Nations are in an important period of transition, rebuilding our communities and moving away from governance under the Indian Act. Having the financial tools that are now available through the FNFA is critical in ensuring that transition can take place and in securing a better future for our peoples…For investors, FNFA bonds also provide a new and exciting ethical investment option. My vision is that most Canadians will one day have FNFA bonds in their portfolios as they do municipal, provincial or federal bonds."
Ernie Daniels, President and CEO of the First Nations Finance Authority, was quoted as saying, "This successful debenture issue reflects the growth in First Nations economies and the material steps that have been taken moving forward, including the establishment of strong financial systems by First Nation governments…First Nations economies are emerging as real players on the world stage."