The Government of Jamaica (GOJ) wants to pay out investors holding three bonds valued at US$2.33 billion, offering premiums above face value on the debt.
“GOJ announces an invitation for offers to tender for cash,” stated a notice headline on the Government’s offer.
The invitation opened on Wednesday, and expires on Wednesday, September 9. The size of the bonds are known, but the Government has not disclosed whether it will pay out the entire bonds or partial amounts. The buyback covers bonds paying 6.750 per cent interest and due in 2028, 8.500 per cent due in 2036, and 8.000 per cent due in 2039 — a combined US$2.33 billion outstanding.
The invitation is not conditional on a minimum participation level, but it is subject to the successful pricing and closing of a concurrent new bond issuance. The Government started a “roadshow” to raise funds, but the amount remains undisclosed in its prospectus sent to the US Securities and Exchange Commission on Wednesday.
The prospectus filed with the US Securities and Exchange Commission confirms that the new bond will be repaid in three roughly equal instalments, with interest paid semi-annually from 2027. Citigroup and Scotiabank are acting as dealer managers for both the buyback and the new issuance, and the new bond will be listed on the Luxembourg Stock Exchange.
Jamaica has authorisation to borrow up to US$1 billion under the new arrangement, though this is a ceiling rather than a target. Proceeds will be used first to fund the bond buyback, with any remainder going into the general Budget. This means the size of the new bond sale will ultimately determine how much of the old debt the Government can retire.
If the total purchase price of all validly tendered notes exceeds the maximum the Government is willing to pay, it may prorate acceptance across one or more series. Holders who wish to subscribe for the new bonds can obtain a priority allocation code from the dealer managers, which may give them preference in the allocation of new notes, though no allocation is guaranteed.
The Government has also noted that Jamaica’s economy continues to recover from Hurricane Melissa, which caused damage last October equivalent to more than half of the island’s annual output.
business@gleanerjm.com
