The Jamaican government is floating a new sovereign bond on international markets, in search of fresh capital to pay down existing debt.
It’s the first major global bond raise for the country in four years.
Net of discounts and expenses, the offer, priced at a coupon of 9.625 per cent, will raise about “US$297.4 million”, which translates to more than $46 billion in local currency.
The government intends to use 80 per cent of the proceeds – approximately US$238.96 million – to pay bondholders who last week accepted an offer for early exit of three existing Jamaican bonds, according to the prospectus issued by investment bank Citigroup Capital Markets, the global coordinator of the offer. Citigroup will also act as the joint arranger and joint bookrunner with BofA Securities.
The rest of the proceeds will be used for general budgetary purposes.
The new bond, which matures in 2030, carries a higher interest rate than the old bonds being redeemed by Jamaica – the 7.625% due 2025; the 9.250% due 2025; and the 6.750% due 2028.
Those bonds represent outstanding debt of US$1.76 billion, but at the close of the offer, acceptances for early payouts fell well below that, at US$262 million, reflecting 15 per cent take-up, market filings show.
Jamaica’s total debt stock was estimated at $2.15 trillion in July, or about US$13.8 billion.
Back in 2019, the Jamaican government also swapped out old US notes which, at the time, carried even higher rates. That transaction related to four bonds – the 11.625% due 2022; the 9.250% due 2025; the 7.625% due 2025; and 6.750% due 2028.