Business
Cost of borrowing rises for Jamaica after Grenada, Belize default
Jamaica’s borrowing costs are surging to the highest level in nine months after defaults by two Caribbean neighbors combine with the region’s slowest economic growth prospects to undermine investor confidence.
Yields on dollar bonds due in 2019 from Jamaica, which restructured US$7.8 billion of bonds almost three years ago, reached 8.31 percent on October. 31, the highest since February, and traded at 8.25 percent yesterday.
Jamaican notes lost 0.9 percent in October, the worst performance among 15 Central American and Caribbean nations, according to JPMorgan Chase & Co.
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While Jamaican yields are below the 13 percent level reached before its 2010 restructuring, some investors are concerned that Prime Minister Portia Simpson-Miller’s administration will struggle with debt payments following Belize and Grenada’s defaults this year
Expansion for the US$14.5 billion economy is expected to remain weak as Simpson-Miller vows to cut spending to lower debt and a global slowdown damps mining exports, Jamaica’s central bank said August 24.
That was before Hurricane Sandy caused at least J$5 billion Jamaican dollars (US$55 million) in damages last month before it headed to the U.S., though it largely spared resorts along the northern coast.
“Even before the hurricane we faced serious economic challenges,” Simpson-Miller said October 30. “This has been made worse by the passage of Hurricane Sandy.”
