By Al Edwards, Business Co-ordinatorTHE GOVERNMENT has got a temporary reprieve from its cash shortage, having raised 200 million euros (US$253 million) in a sale of euro-denominated bonds on the open market.
The Minister of Finance and Planning, Dr. Omar Davies had repeatedly said that he would go to the international capital market at the appropriate time.
The new bond is issued with a coupon of 10.5 per cent. Interest will be accrued from February 11, 2004, with the first interest payment due on February 11, 2005. The bond matures on February 11, 2009.
The issue was managed jointly by Commerzbank and Deutsche Bank of London, England.
The Gleaner understands that the size of the issue was increased from Euro 100 million to Euro 200 million as the former amount was oversubscribed.
Jamaica has a Euro 175 million bond maturing in August 2004, which the new issue is expected to finance.
"This new bond should ease some of Jamaica's fiscal liquidity requirements and bolster the Net International Reserve (NIR), which stood at US$1.16 billion at the end of December 2003," says Jamaica Money Market Brokers (JMMB) analyst Jason Morris.
BOJ REDUCES RATES
As news of the placement emerged, the Bank of Jamaica (BoJ) reduced rates on its open market instruments yesterday, the second time in two weeks, and the ninth since March 2003.
The one-year rates are now at 22 per cent, coming from a high of 36 per cent 10 months ago.
The central bank took this decision to reduce rates based on the continued stability in the foreign exchange market, supported by improved income flows from tourism and mining.
The BoJ also cited the recent price performance of Jamaica's externally issued bonds and the favourable outlook for emerging market debt for this latest move.
