Jamaica to sell $800 million of dollar bonds as economy expands in first quarter

Jamaica plans to sell US$800 million of dollar bonds in its first overseas sale since 2011, according to an official familiar with the offering.

The Caribbean island-nation is planning a sale of amortizing dollar bonds due in 2025 to yield 7.625 percent, said the official, who asked not to be identified because the terms are not yet set. BNP Paribas SA and Citigroup Inc. are managing the offering. The securities will have an average life of 10 years, with 3 equal principal payments in 2023, 2024 and 2025, the person said.

Jamaica, has defaulted twice since 2010 and restructured US$9 billion of local bonds last year. Prime Minister Portia Simpson-Miller’s administration has cut tax deductions, limited public-sector wage growth and generated the first budget surplus since 1995. According to the International Monetary Fund (IMF), Jamaica is aggressively undertaking the policies needed to tackle a debt burden equal to 140 percent of gross domestic product.

According to financial experts Jamaica’s fiscal accounts “will be near balance this year” – an impressive achievement.

The average yield on the country’s debt has plunged to 7.3 percent, the lowest level since 2011, as the country received pledges of US$2 billion in support from the Inter-American Development Bank and other development partners.

Proceeds from the debt sale will be used to help pay US$205.2 million of bonds due this year and for general government purposes, said the official. The country’s B-rating is six levels below investment grade at Standard & Poor’s, matching Venezuela, Pakistan and Lebanon.

Jamaica saw its US$15 billion economy expand for a third consecutive quarter in the first three months of the year following six consecutive quarters of contraction. Moody’s Investors Service, which rates the country nine steps below investment grade at Caa3, raised its outlook on the country’s debt to positive from stable in February.

Source: Bloomberg