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Jamaica Raises US$800M From External Bond Market

5527901608_24c2089047_z KINGSTON, Jamaica — Days after Jamaica received a ringing endorsement from the International Monetary Fund’s top officials, Finance Minister Dr. Peter Phillips and his debt management team took a chance on the international bond market, and got a reception beyond expectations.

The ministry got record subscriptions of US$800 million. The coupon rate settled at 7.625 per cent, below the pricing range of 7.75 per cent to 8 per cent that the market had initially expected.

Bids on the notes actually rose to US$3.8 billion or more than four times the ministry’s upsized debt-raising target.

The bond is priced to fully mature in about 10 years, in 2025, but the principal will be repaid in three annual tranches, starting in 2023.

Local pension fund managers and bond traders were bullish from early morning on the offering, which is now Jamaica’s largest global issue. Among the current outstanding global bonds, the largest is the 2039.

Foreign-exchange inflow

Traders and analysts said they expected an immediate impact on the appreciation of the Jamaican dollar due to the expected inflows of foreign exchange from the bond proceeds.

BNP Paribas and Citigroup were book-runners on the transaction, which opened on July 1.

The US dollar-denominated bond was rated ‘Caa3’ by Moody’s and ‘B-‘ by Fitch and Standard & Poor’s.

Some of the proceeds will finance repayment of the government of Jamaica’s  150 million euro bond, which matures in October, refinance other debt, and fund new investments, said the government-issued guidance sheet.

Rezworth Burchenson, managing director of Prime Asset Management Limited, said after the announcement of the US$800 million issue, that it was a vote of confidence in Jamaica’s economic reform program.


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