Mayberry to raise $2b in debt at higher price
Brokerage and investment banking firm Mayberry Investments Limited plans to raise up to $2 billion to replace debt due this month.
The two-year bond due to mature in October 2024 will result in Mayberry paying higher interest on the new debt at 10 per cent as it replaces existing debt priced at 6.5 per cent.
Mayberry CEO Gary Peart said that the rates are reflective of the existing market. He added that although it will result in higher interest on the liability side, Mayberry was also earning higher interest on the asset side of its business.”The yield has increased as well on the asset side,” he said.
Mayberry Group’s assets at $53.6 billion are more than double its liabilities which include existing loans and bonds. Equity in the company increased to $18.4 billion at the end of June, compared to $15.8 billion for the prior period in 2021. The improvement was due to a rebound in profit.
The Mayberry bond is restricted to high net worth investors, otherwise known as accredited investors. The term sheet also specifies that trading of the bond must occur within that group.
Investors in the capital markets have suffered declines in the value of equities and bonds since the onset of the pandemic. The dip in bond prices however has resulted in an increase in yield for new purchasers. Consequently, the price of new bond issues is trending higher to make them comparatively attractive to existing bond yields and also the higher benchmark rate from the Bank of Jamaica.
The central bank’s policy rate has risen from 0.5 per cent a year ago to 6.5 per cent as of September 30. The policy rate is what BOJ pays banks on the deposits parked overnight at the central bank.
Financial houses take their rate guidance from the BOJ as that’s the basis for making an interest rate spread between what they can earn from the central bank and what they offer to clients.
During the final week in September, the overall sovereign bonds JAMAN price movement was “weak”, according to another investment house, Proven Wealth. Short-term bond yields declined, while the longer-term bonds saw a decline in prices paired with higher yields, Proven Wealth said in its weekly investor newsletter dubbed ProvenPulse.
“This was in response to the US Fed rate hike in the prior week,” the firm said. “For the week starting October 3, 2022, we expect yields on short-term bonds to continue to fall in line with higher prices as investors cut their duration exposure as interest rates trend upward.”