Apr 2013 Financial News

NDX2 valued at J$25b

Apr 02, 2013

Big banks announce participation

Three of a reported eight financial companies have said they will participate in a second round of the National Debt Exchange to help the Government plug a shortfall in the funds needed to drive down its debt-servicing costs.

However, the Ministry of Finance says that all eight have supported the offer, which will swap another J$25 billion worth of JMD and USD GOJ bonds.

Under the transaction, the ministry has issued a new USD bond with a tenure of 3.5 years; while the new JMD bonds will mature in 2024 and 2030.

National Commercial Bank Jamaica said it would exchange J$7 billion on aggregate under the new 'Private Debt Offer'.

Scotia Group Jamaica also said it would swap J$4.88 billion of bonds for "lower coupon and amended tenure". The amount includes the J$1.8 billion participation disclosed separately by its subsidiary, Scotia Investment Jamaica Limited via a stock market filing.

The two banks together account for J$11.88 billion or just under half of the total swap.

GraceKennedy Limited, parent to First Global group, was the first to announce its acceptance of the offer, which was made on March 22, but did not disclose the amount of bonds to be swapped by the group.

Scotia Group and its subsidiaries previously swapped J$119.4 billion under the NDX, which closed on February 22, while NCB group swapped J$118 billion.

GOJ is restructuring its debts to meet qualifying conditions for a bailout from the IMF. It needed enough buy-in to carve out annual savings equivalent to 8.5 per cent of GDP, but fell short. To get there, the ministry needed at least 99.5 per cent take-up of the J$860 billion NDX, but got 98.8 per cent participation, Finance Minister Phillips said last week.

"Although the first stage was highly successful and indicated broad support from the financial community for the new IMF-supported programme, the success rate was below 100 per cent and there were adjustments to the original proposal to take account of the choices of instruments which investors preferred," said the ministry in a statement on the new offer.

"This was done in order to take account of the impact on their individual balance sheet and exposure."

second stage of NDX

The finance ministry says the private offer, which it described as the second and final stage of the NDX, covered J$20 billion and US$51 million worth of bonds held by local financial institutions - which amounts in total to J$25 billion.

The finance ministry said the transaction "has successfully locked in savings for GOJ amounting to 8.5 per cent of GDP by 2020". It said the offer was incorporated in the design of the NDX and that key aspects were discussed with leading institutions ahead of the NDX.

"However, timing, structure and participation were further developed after the close of the first stage of the NDX as the savings from that transaction needed to be determined first," the ministry said.

It confirmed the other five as Sagicor, JMMB Group, Jamaica National Building Society, First Global Financial Services, Victoria Mutual Building Society and Guardian Life Limited.


Source:
business@gleanerjm.com
Jamaica Gleaner
Sunday March 31, 2013

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