Jordan Hires Banks to Manage Bond Sale, Finance Minister Abu Hammour Says

Jordan hired JPMorgan Chase & Co., HSBC Holdings Plc, Credit Suisse Group AG and Arab Bank Plc to manage the sale of a Eurobond, Finance Minister Mohammad Abu Hammour said today.

In an August interview, Abu Hammour said the government planned a $500 million bond issue maturing in five years by the fourth quarter of this year to help finance the nation’s budget deficit. The government selected Moody’s Investors Service and Standard & Poor’s to rate the issue, he said in a telephone interview today.

Last month, the minister said Jordan wanted to finance the budget deficit externally rather than internally, “leaving the liquidity in the local market for the private sector.” Jordan imports more than 90 percent of its oil and typically relies on foreign investment and grants to finance its budget deficit. Economic growth may reach 4 percent this year, Abu Hammour said in May, compared with an International Monetary Fund forecast of about 3.4 percent.

Foreign grants to the country more than doubled in the first seven months of the year to 208 million dinars ($294 million), from 103 million dinars in the same period in 2009, the Ministry of Finance said in a preliminary report earlier this month.

Narrowing Deficit

The kingdom’s budget deficit narrowed to 281 million dinars in the seven months after receipt of the grants, compared with a deficit of 641 million dinars for the previous year. The projected budget deficit for this year after grants is about 1 billion dinars, or 6 percent of gross domestic product, down from about 9 percent last year.

Jordan’s long-term foreign currency debt is rated Ba2 at Moody’s Investors Service and BB at Standard & Poor’s, the second highest junk ranking.

Jordan’s foreign debt increased by 1.6 percent to 3.93 billion dinars in the first seven months of the year, the Ministry of Finance said in a report this month. Domestic debt increased 10.6 percent to 6.4 billion dinars.

To contact the reporter on this story: Massoud A. Derhally in Beirut, Lebanon at mderhally@bloomberg.net

To contact the editors responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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