Jordan to Pick JPMorgan, HSBC for $500 Million Bond

Jordan will select banks including JPMorgan Chase & Co., HSBC Holdings Plc, Credit Suisse Group AG and Arab Bank Plc to manage the sale of a $500 million Eurobond, Finance Minister Mohammad Abu Hammour said.

The government plans to offer debt maturing in five years by the fourth quarter of this year to help finance the nation’s budget deficit, Abu Hammour said in an interview by telephone from Amman today. In June, Abu Hammour said Jordan was considering either the sale of conventional or Islamic bonds, known as sukuk.

“We are in the final stages of granting these banks the right to manage the sale,” he said. “We want 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 3.5 percent.

The projected budget deficit for this year after grants has been revised to about 1 billion dinars ($1.4 billion), or 6 percent of gross domestic product, down from about 9 percent last year, according to Ministry of Finance estimates. Overseas grants increased 65 percent in the first six months of 2010 to 157.9 million dinars from a year earlier, the ministry said in a preliminary report on its website Aug. 16.

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. It had 3.87 billion dinars of overseas public debt outstanding as of June this year, according to a preliminary report by the Ministry of Finance.

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