Jamaica plans to sell $800 million of dollar bonds in its first overseas sale since 2011, according to a person familiar with the offering.
The Caribbean island is planning a sale of amortizing dollar bonds due in 2025 as soon as today to yield 7.625 percent, said the person, who asked not to be identified because the terms aren’t set. BNP Paribas SA and Citigroup Inc. are managing the offering. The securities will have an average life of 10 years, with three equal principal payments in 2023, 2024 and 2025, the person said.
Jamaica, the second-most-indebted country in emerging markets, has defaulted twice since 2010 and restructured $9 billion of local bonds last year. Prime Minister Portia Simpson-Miller’s government has cut tax deductions, limited public-sector wage growth and generated the first budget surplus since 1995. The International Monetary Fund said June 5 that Jamaica is undertaking the policies needed to tackle a debt burden equal to 140 percent of gross domestic product.
“Its fiscal adjustment has been huge,” Carl Ross, a Boston-based money manager at Grantham Mayo Van Otterloo & Co., which manages $12 billion in fixed-income assets, said in an e-mail. “Their fiscal accounts will be near balance this year, which is an impressive achievement.”
The average yield on the nation’s debt has plunged to 7.3 percent, the lowest level since 2011, as the country received pledges of $2 billion in support from the IMF, the World Bank and the Inter-American Development Bank.
Proceeds from the debt sale will be used to help pay 150 million euros ($205.2 million) of bonds due this year and for general government purposes, said the person. The country’s B- rating is six levels below investment grade at Standard & Poor’s, matching Venezuela, Pakistan and Lebanon.
The country, known for its beach resorts and reggae music, saw its $15 billion economy expand for a third consecutive quarter in the first three months of the year following six consecutive quarters of contraction.
Moody’s Investors Service, which rates the country nine steps below investment grade at Caa3, raised its outlook on the country’s debt to positive from stable in February.