Oct 17, 2019 Last Updated 2:46 PM, Oct 8, 2019

The Minister of Finance & the Public Service

The Hon. Nigel Clarke, DPhil., MP, is Jamaica's Minister of Finance and the Public Service and is Member of Parliament for St Andrew Northwestern. ...

Financial Secretary

Miss Darlene Morrison...

Jamaica to Save $2.5 Billion of Interest Costs Annually as a Result of Recent Liability Management Transaction

The Government of Jamaica ("GOJ") engaged Bank of America Merrill Lynch and Citibank as joint underwriters/arrangers to execute a Liability Management Transaction in the International Capital Markets on September 4th, 2019. The transaction comprised two components:

  1. The issue of an Invitation for the purchase of any or all of the outstanding Global Bonds due 2022, 2025 and 2028 for cash; and
  2. The issuance of US$ 815.0 million in notes through the reopening of the 7.875% Bonds due 2045.

The transaction settled on September 16th, 2019.

On September 4th 2019, a 5-day Tender Offer was announced targeting the following bonds: (i) the 11.625% 2022, (ii) the 9.25% 2025, (iii) the 7.625% 2025 and (iv) the 6.75% 2028 with total principal outstanding, across all four bonds, of approximately US$3.083 billion. At the expiration of the Tender Offer on September 10th, 2019, holders of an aggregate principal amount of US$966.9 million agreed to sell their bonds back to the GOJ. The participation rate of 30% is above international benchmark of 20% for these transactions.

The total cost of the tender was US$1,181.30 million, representing the prevailing market value of those bonds, in addition to aggregate accrued interest of US$21.33 million payable from the last interest payment date to the date of the tender offer.

The second component of the transaction was executed on September 11th, 2019, involving the issuance of new bonds through the reopening of the 7.875% Bonds due 2045. The principal amount raised was US$815.0 million at a yield of 5.80%. The offer was over-subscribed three times and was issued at a premium of 27.6% over the related principal amount resulting in a yield of 5.80%. Overall, total proceeds raised from the bond issue therefore amounted to US$1,048.60 million, including interest income of US$8.56 million.

The total principal outstanding on the 7.875% Bonds due 2045 increased from US$1 billion to US$1.815 billion.

Minister of Finance and the Public Service, Dr. Nigel Clarke noted "The liability management transaction achieved the following:

  1. Annual interest saving to Jamaica of US$18 million or J$2.5 billion per year;
  2. Debt reduction of US$35 million after netting off GOJ's cross-holdings;
  3. Extension of the maturity profile of Jamaica's external debt. Prior to this transaction, 36% of Jamaica's external debt matured after 10 years; now 46% falls due after 10 years. Similarly, prior to the transaction approximately 12% of Jamaica's external debt matured after 20 years; now 21% of Jamaica's debt matures after 20 years.

The reduction in Jamaica's annual interest costs of J$2.5 billion per year, the reduction in Jamaica's debt stock of US$35 million and the lengthening of the maturity profile of Jamaica's external debt together improve Jamaica's finances and our credit profile."

For further information contact:

Communication & Public Relations Branch
Ministry of Finance and the Public Service
30 National Heroes Circle
Kingston 4
Tel: (876) 932-4656/4660/4655
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.;
Contact: Elaine Oxamendi Vicet
https://www.facebook.com/MOFJamaica/

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