Nov 2014 Financial News

Jamaica signals intention to borrow US$1b

Nov 21, 2014

JAMAICA will consider floating up to US$1 billion in debt over an unspecified period within the United States, according to its registration filing this month.

This prospectus forms part of a 'shelf registration' statement that the Government filed with the Securities and Exchange Commission (SEC), which signals to the market the possibility of such a float.

"Under this shelf process, Jamaica may sell, from time to time, any of the debt securities described in this prospectus in one or more offerings up to a total US dollar equivalent amount of $1 billion," stated the prospectus posted on the SEC last week.

The Government raised US$800 million in a bond offer earlier this year in a move which followed an earlier shelf registration issued in 2012 for up to US$1 billion. As such, the Ministry of Finance told the Jamaica Observer yesterday morning that this new shelf forms part of plans to replenish previous amounts floated.

"Government is replenishing its US$1 billion shelf after executing the Clarendon Alumina Production (CAP) Debt Exchange and Consent Solicitation of approximately US$161.9 million in 2013 and selling US$800 million bonds in July of this year," stated the Ministry of Finance in an e-mailed correspondence with the Caribbean Business Report. "The shelf was last replenished in 2012. The shelf replenishment is compliant with the extended fund facility (EFF) [agreement with the International Monetary Fund (IMF)]."

The prospectus, signed by Finance Minister Dr Peter Phillips, added that in the event of floating a bond the Government would honour its debt obligations and avoid market uncertainty by remaining a member of the IMF. It added that "each time" Jamaica sells, purchases or exchanges securities under this shelf process it will provide a prospectus supplement that will contain updated information about Jamaica, "if necessary", and specific information about the terms of that offering.

"Jamaica has pledged that so long as the debt securities are outstanding, it shall maintain its membership in the IMF, and continue to be eligible to use the general resources of the IMF under the IMF Articles of Agreement," stated the prospectus.

Brokers and experts that spoke to the Caribbean Business Report declined to comment up to press time. The country's external debt was estimated at US$9.1 billion (J$1 trillion) in July this year, which formed part of its roughly $2.06 trillion in total debt.

Last year, Jamaica re-entered into a lending arrangement with the IMF under an EFF.

Earlier in November, IMF staff indicated that Jamaica requires sustained "reform momentum" and fiscal prudence going forward.

Source:
BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com
Jamaica Observer
Friday November 21, 2014    

http://www.jamaicaobserver.com/business/Ja-signals-intention-to-borrow-US-1b_17981926