KINGSTON, Jamaica, CMC – The Jamaica authorities has issued the first-ever Jamaican Greenback (J$) linked worldwide bond for J$46.6 billion or US$300 million, in accordance with a press release launched on Tuesday.
It mentioned the November 3 concern, oversubscribed 1.4 instances, consists of Senior Unsecured Notes due 2030, registered with the United States-based Securities Change Fee (SEC).
“The operation represents the inaugural J$-linked transaction for the Authorities of Jamaica (GOJ) in worldwide capital markets and accomplishes the GOJ’s goal of opening native foreign money debt points to worldwide traders.
“This can assist to successfully scale back the GOJ’s publicity to USD-denominated debt as curiosity and principal funds are linked to the worth of the Jamaica greenback,” the assertion mentioned, including that “it needs to be famous that whereas the problem is denominated in J$, debt service funds to bondholders will likely be in US$ decided by the common of the prevailing J$ change fee over the ten enterprise days earlier than every fee date.
“This successfully signifies that worldwide traders on this bond tackle Jamaican Greenback change fee threat,” the assertion mentioned, including that “this bond issuance is a part of the second section of a legal responsibility administration operation, the place the proceeds of this Jamaican dollar-linked bond had been used to purchase again excellent US$-denominated bonds.”
The assertion mentioned that the worldwide credit standing company, Moody’s, printed an Issuer’s Remark which said that the GOJ’s use of the J$ linked Bond issuance proceeds to purchase again excellent USD-denominated bonds will scale back “the federal government’s publicity to foreign-exchange threat, which is a credit score optimistic.”
Moody’s additionally said that “over time, a continued discount within the authorities’s publicity to exchange-rate threat would handle one of many sovereign’s key credit score challenges.”
Within the first section of the transaction, Jamaica issued an invite for Affords to Tender for Money, its 7.625 p.c Notes due 2025, 9.250 p.c Notes due 2025, and 6.750 p.c Notes due 2028.
The Invitation commenced on Thursday, October 19, 2023, and expired on Friday, October 27, 2023.
The assertion mentioned that the landmark providing achieved a number of important milestones. It was the primary J$-linked transaction by the Jamaica authorities, “representing the breaking of a brand new frontier into profitable native foreign money offers within the worldwide markets”.
The assertion mentioned that the worldwide investor participation within the J$ hyperlink bond was 93.5 p.c of all individuals, with 6.5 p.c coming from home traders, and that globally, this represents probably the most important participation fee by worldwide traders in an area foreign money concern throughout 2023;
“This J$ hyperlink bond represents the bottom coupon and yield for an area currency-linked world bond transaction in 2023 to this point; That is the first-ever Jamaican buyback of US$ debt related to a J$-linked new issuance, supporting the Authorities’s effort at de-dollarizing the nationwide debt; and this J$ linked bond concern marks Jamaica’s first return to the worldwide capital markets since 2019.”
Finance and the Public Service Minister, Dr. Nigel Clarke, who led a Jamaican delegation on an investor roadshow in London and New York related with the problem, mentioned, “Worldwide bond traders investing in a J$-linked bond, and accepting J$ foreign money threat, would have been unimaginable solely 5 years in the past.
“That is a particularly important transaction that opens new frontiers and presents new prospects for Jamaica.”
Clarke mentioned that the event represents a considerable coverage dividend emanating from Jamaica’s considerably improved macro-economic fundamentals, the deepening of financial coverage transparency, and the institution of the pursuit of low, steady, and predictable inflation as the target of financial coverage by the regulation that established central financial institution independence.
He mentioned the Jamaica authorities’s new capability to faucet worldwide traders for native currency-linked debt broadens, deepens, and diversifies the federal government’s funding sources whereas offering the chance to change the nationwide debt’s foreign money combine over time.
“This makes Jamaica extra strong. As well as, the extra important the proportion of our nationwide debt denominated in, or linked to, Jamaican {Dollars}, the stronger and extra resilient Jamaica will likely be.
“This transaction, due to this fact, enhances Jamaica’s resilience and paves the way in which for comparable worldwide points sooner or later,” Clarke added.
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