New bond issue shows int'l confidence
Source: Jamaica Observer (Original Article)
The Jamaican Government raised US$350 million late yesterday afternoon with the issue of a global Eurobond maturing in 2019 at a rate of eight per cent each year - the same interest rate the Government borrowed in our last international Eurobond issue in October, or the lowest borrowing rate on record.
More importantly, the successful bond issue means that despite the recent collapse of one of Jamaica’s principal external financial intermediaries, Bear Stearns, as the result of the ongoing international financial crisis, Jamaica still has access to the international capital market.
The money was raised for Jamaica jointly by US investment bank Morgan Stanley and German headquartered Deutsche Bank, with the bond being offered at a price of $97.498, giving it a yield to maturity of 8.375 per cent.
The lower the price of the bond, the higher the yield, and vice versa.
The principal will be paid off in three equally portioned instalments in 2017, 2018 and 2019.
Oppenheimer’s Greg Fisher, who has probably traded more Jamaican bonds than anybody else, thinks that the price of the bonds fell immediately after the issue because “this deal broke so late in the day” against the backdrop of a weak
US market.
Fisher told the Business Observer that such a large issue is likely to put some downward pressure on some of the other issues in the market “A $350-m issue in this market is really going to test the liquidity of the entire Jaman (Jamaica Eurobond) curve. But as always, yield entices the investor. so hopefully the new deal will turn out to be a real coup for the government.”
Fisher’s colleague, Oppenheimer’s new Managing Director for Investments Dr Carl Ross commented exclusively for the Business Observer on why he thought the issue was successful despite the extremely difficult international environment.
“I believe the rating agencies’ stable outlooks as well as the That 70s Show dvd surprising robustness of Jamaica’s net international …continue reading