A new variable rate bond will hit the market August 10, the Finance Ministry announced Friday, a day after it released results of an $8.6 billion uptake from a similar instrument placed just over a week ago.
The new offer represents a stronger test of the market's staying power.
The bond matures in 20 years and has an initial coupon rate of 12.81 per cent for six months.
Interest payments thereafter will be based on the six month Treasury Bill yield plus a reset of 1.625 per cent (WATBY+1.625)
The July 28 placement, which matures 2022, has a 16-year tenor offered at an initial coupon rate of 12.82 per cent payable next January, with interest payable thereafter at WATBY+1.625.
The placement yielded the second highest uptake on a variable bond in years, eclipsing the $8.09 billion raised on a 10-year VR bond in March, but trailing a 15-year instrument that snagged over $10.5 billion in June.
Those two offers were priced initially above 13 per cent with resets of 1.5 and 1.625 per cent, respectively on the six month T-bill.
Fixed instruments have traditionally been more attractive to a market of moderate risk takers, with one instrument redeemable in five years, taking in a record $14.3 billion in April.
holding to projections
The Finance Ministry's foray into variable instruments - it has issued five VR bonds this year, and at least 20 since 2004 - suggests it is holding to projections that market-driven and central bank-nudged interest rates would remain at or around their current levels.
Bank of Jamaica currently sells money market instruments to its primary dealers at 12.6 to 13.6 per cent across tenors ranging from three months to a year.
The new debt issued by the Finance Ministry effectively grew public liabilities on investment debentures and bonds to just under $185.9 billion, within a wider public debt pool of $858.6 billion as at the end of April.
