Feb 2016 Financial News

NDX US$550-million payout made on schedule

Feb 12, 2016

The Government of Jamaica was expected yesterday to have paid out US$550 million to bondholders of the restructured securities affected by the National Debt Exchange (NDX) programme.

Minister of Finance Dr Peter Phillips announced the pending payment while speaking during an interview aired online on Bloomberg Business on Wednesday.

“Tomorrow we will be paying out US$550 million in restructured bond arrangements. It’s a good thing,” Phillips outlined, also adding that the Government was going back to the market with new bond issues, some of which he said would be listed on the Stock Exchange, “hoping to generate a secondary market”.

The Ministry of Finance and Panning is expected to issue new bonds totalling $15 billion.

Under the NDX, financial institutions and government bondholders were required to exchange their existing bonds for bonds with longer maturities and at lower interest rates. The principal was not affected.

For yesterday’s payments, bondholders included many pension funds and institutional investors.

The debt exchange offer made possible the reduction of the country’s debt-to-GDP (Gross Domestic Product) ratio by 8.5 per cent, or around $17 billion per year, between the start of the offer in 2013 and maturity in 2020.

The NDX was part of the prerequisite to signing a US$932.3-million four-year Extended Fund Facility with the International Monetary Fund (IMF).

Responding to Bloomberg’s observation that Jamaica had the highest deb-to-GDP ratio in the Caribbean, Dr Phillips said Jamaica’s debt will be down to 124 per cent of GDP by March.

“It is still much too high, but we have embarked on an IMF-supported programme… our reserve accumulation is above target and we have built in substantial buffers. Inflation is at a 50-year low. Employment is being generated. We would like to see faster rates of growth but, yes, it’s a good story.”

Phillips said that nations of the Caribbean can all learn from each other as it regards growth, “but we started out each of us from different starting points. Suriname is a commodity-driven economy… the Dominican Republic has very different population densities and opportunities…. What we all have learnt is if you are going to participate in the global economy as a small island state, you need low debt levels, clean public accounts, and ensure that you are not running up the deficit.”

Phillips said that the Government of Jamaica was going back into the domestic bond market because there is “an expression of interest”.

Source:
Jamaica Observer
Friday February 12, 2016

http://www.jamaicaobserver.com/business/NDX-US-550-million-payout-made-on-schedule_51468