Jamaica Issues US$2 billion in Global Bonds

July 31st, 2015

by Juan Pedro Schmid

Photo courtesy of the IDB

It was a long time in the making (and keeping the rumor mills spinning) but today Jamaica finally issued the long awaited bond to finance a Petrocaribe buyback. They issued two bonds, US$1.35 with a rate of 6.75% maturing in 2028 and US$650 million at 7.875% maturing in 2045. As such, this issuance will provide funds to finance the Petrocaribe debt buyback as well as finance the budget.

Besides the potential to dramatically (around 11% of GDP) reduce debt-to-GDP by exchanging around US$3 billion debt owed to PDVSA through the Petrocaribe agreement for US$1.5 billion, what really struck me is the tone of the news reports. For instance, Reuters indicates in a news article titled ‘Jamaica takes center stage with US$2bn bond sale’ that “Jamaica was poised to raise US$2bn through a dual-tranche bond sale on Thursday, adding much-needed supply to what has been a lackluster primary market in Latin America.” The same article cites an investor as saying “(International) investors are underweight Jamaica and it has been one of the best performing countries in the EMBIG index over the last few months.”

Hear, hear, Jamaica providing ‘much needed supply’ and being one of the best performing countries in the index. The country still has many vulnerabilities and even the Petrocaribe deal has to be evaluated with care as it exchanges low interest debt with debt at market rates. Given the reduction in the face value, it will still yield gains for Jamaica’s debt sustainability but it is no free lunch. But my point is different: As someone who has dedicated the last 4 years to monitoring the Jamaican economy, I am pleased to see how Jamaica today has been treated and is being taken seriously in the international financial markets.

And then there is of course the victory over the USA in the Concacaf Gold Cup semifinal.

Tags: billion, bond, Concacaf Gold Cup, EMBIG, Global Bonds, Gold Cup, Jamaica, Petrocaribe