Ashford W. Meikle, Staff Reporter
"I THINK Jamaica has done an incredible job of selling the Jamaican name internationally," said Gregory Fisher, head of the Atlanta-based investment house, Oppenheimer Inc., as he explained the reason for the huge demand for the Government's 30-year US$250 million bond floated last week.
It was the first 30-year bond issued by the Government, attracting US$400 million within hours of its announcement. The bond was rated 'B' by S&P and has a yield rate of 8.55 per cent.
COUPON RATE
Importantly, with a coupon rate of 8.50 per cent, it is the lowest ever offered on any GoJ instrument. The money will be used to pre-fund the Government's 2006/2007 external borrowing programme.
Fisher said that the success of the bond signalled the level of comfort that the international markets have with emerging markets instruments.
"From the standpoint of the international markets I do think it is significant," he said. It demonstrates that there are some 'B' rated countries "that can still raise money on the international markets - there are not many," he said in a telephone interview with Wednesday Business.
According to the Oppenheimer executive, the current interest in and demand for Jamaican global bonds is expected to remain strong. "You are seeing a lot of hedge funds that are going to, over the next couple of years, buy bigger pieces of Jamaica."
RENEWED INTEREST
Fisher, who has been trading Jamaican bonds for some years, said that in the last nine months there has been a renewed interest in Jamaica global instruments because of the stability of the Government's economic policy.
"As long as Jamaica can maintain its fiscal restraints and continue to focus on the debt ratio I think the bonds will continue to do well."
Fisher noted that the bond was attractively priced. "I think the yield is a little bit sexier than some of the conservative credits, say, Mexico, Panama, and Costa Rica," said Fisher.
He noted that, historically, Jamaican market has never been correlated to the U.S. Treasury or the rest of the emerging markets. Instead, "What you see in the Jamaica curve is supply and demand and basically, as long as there is a good, strong local bid, you'll see the big U.S. institutions going in because they feel if they need to sell they have a better shot of selling bigger positions in Jamaica than counties with higher credit than, say, Trinidad."
