NEW YORK, United States — Minister of Finance Audley Shaw (second left) and Governor of the Bank of Jamaica Brian Wynter (centre) met with A J Mediratta, president of Greylock Capital (right with bottle of Appleton rum), CEO Hans Humes (second right); and Jonathan Prin, director of research, in the Greystock Capital board room in New York City during the June road show.

Jamaica yesterday raised US$869 million in the global capital market by reopening two of its already issued Eurobonds maturing in 2028 and 2045 respectively, at a premium.

Before the new issues, the 2028 had US$1.35 billion in outstanding bonds (at a coupon of 6.75 per cent) and the 2045 had US$650 million in outstanding bonds (at a coupon of 7.785 per cent).

Jamaica has now issued a further US$505 million as a 2028 Eurobond at a yield to maturity of only 5.0 per cent, and US$364 million of the 2045 bond at a yield to maturity of 6.45 per cent.

Sean Newman, a Jamaican emerging market fund manager at the large US institutional investor Invesco, notes that immediately before the deal, the 2028’s and 2045’s bonds were trading at yields to maturity of 4.94 per cent and 6.45 per cent respectively.

The two global brokers managing the deal, Citibank and Bank of America Merrill Lynch, had offered price guidance at 5.125 per cent (+/- 12.5 basis points) and 6.5 per cent (+/- 5 basis points — a basis point is equal to one hundredth of one per cent).

Significantly, Newman observed, “This is pricing like an investment grade issuer, flat to inside the existing curve.”

The bond deal had been in the works for a while, with two “non-deal” roadshows occurring in June — the first to the US in early June and the second to London in the latter part of the month. The Jamaica Observer reached out to Newman in the intervening week (on June 13th) between the two roadshows, when the 2028’s were yielding 4.87 per cent and the 2045’s were yielding 6.39 per cent. At the time he thought the Government would do a long bond (new 30 year) or tap the 2045’s, issuing at a yield of 6.625–6.75 per cent, with a deal size of up to US$1 billion. This turned out to be a pretty accurate forecast overall, which the Government actually bettered, in terms of pricing.

http://www.jamaicaobserver.com/business-observer/jamaican-government-borrows-succesfully-raises-us-869-million-in-global-bond-market_107911