BY KEITH COLLISTER Observer writer Friday, July 24, 2015
Jamaica yesterday raised a mammoth US$2 billion on the international capital market through the issue of two new Eurobonds.
|Ministry of Finance|
The larger of the two Eurobonds, maturing in 2028, has an interest coupon of 6.75 per cent, for a total value of US$1.35 billion, whilst the smaller-sized Eurobond, maturing in 2045, at an interest rate of 7.875 per cent, makes up the balance of the huge issue at US$650 million.
The interest coupon of 6.75 per cent for the 2028 bond compares very favourably with the US$800-million 10-year Eurobond Jamaica raised last year July at a then new interest rate low for a new issue of 7.625 per cent. This was also Jamaica's largest ever international bond deal at that time.
While the final maturity of the main issue is in 2028, the principal is actually to be repaid in three equal tranches in 2026, 2027, and 2028 respectively, effectively spreading out the repayment burden. In contrast, the second smaller 30-year issue maturing in 2045 has just a single "bullet" repayment on maturity.
The use of proceeds from the bonds is to purchase Jamaica's just under US$3 billion in PetroCaribe debt owed to State-owned Venezuelan oil company Petroleos de Venezuela SA (PDVSA) for US$1.5 billion, or a discount of just under 50 per cent. The remaining funds will be allocated for what the prospectus describes as general budgetary financing.
Commenting on the deal, Jamaican Sean Newman, an emerging market investor based at the giant Invesco fund group, described it as "A success all around. They got (more than) their target in terms of money raised, at a lower price than their last deal." more