Академический Документы
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Introduction
Government of Jamaica’s medium term
borrowing programme guided by medium –
term Debt Management Strategy
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Introduction
• Key objectives of the Debt Strategy
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Introduction
Jamaica’s total debt– J$ 1,000,676.5mn of
which :-
• Domestic debt – J$ 562,108.1mn ,
• External debt –J$438,568.4mn
• Total Debt/ GDP – 126.1%
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External Financing
Jamaica entered International Capital
Markets (ICM) in 1997
• Reasons for entering
Increased domestic interest rates resulting in high levels of
domestic debt servicing costs
Advantage of lower external interest rates which would facilitate
lowering of domestic interest rates
Exit from commercial bank restructuring in 1990
Graduation from Paris club bilateral rescheduling in 1995 – no
longer a heavily indebted country
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Execution Strategy
Objective
• to access the ICM to the extent of gross external amortisation of the external debt
• to maintain good external debt indicators
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Execution Strategy
Timing
• Monitor market developments with the assistance of the
financial advisors to determine appropriate time for
entry
• Schedule issues to coincide with maturities
• Interest of Investment house to go to market
Lead Manager
• Determination based on Request for Proposals (RFP)
• RFP sent to financial institutions – sometimes receive
unsolicited RFP
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Execution Strategy
• Short listing based on the following criteria
Low cost financing
Risk minimization
Diversification of investor base
Extension of maturity profile
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Execution Strategy
Structure and Type of Bonds
• Decision based on
Market conditions
Tenor – based on portfolio needs, must be consistent with debt strategy objective of extending
maturity profile of the debt
Ease of execution
Investor’s interest
Currency – US$ usually first choice, € - volatile although hedging opportunities exist,
exchange rate risk implications
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Execution Strategy
Marketing
• Meetings with investment banks to promote Jamaica’s credit story
• Develop relationship with banks and investment community
• Road shows – major European and North American cities
Usually held at the time of issuance, also non-deal
• Conference calls
• Presentations to investors by lead managers
• Publication of research articles by lead managers
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Execution Strategy
Distribution
• Geographic distribution – initially investors dominated
from USA and Europe broadened to include Latin
America, Caribbean and Gulf states
• Mainly Institutional investors – Insurance companies,
Pension funds, Mutual funds, Hedge funds, Banks,
Money managers
• Initially comprised of mainly retail investors
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Execution Strategy
Documentation
• Offering Circular/ Prospectus
Comprised of historical and financial data ,legal, regulatory and taxation systems, political structure,
relationship with the international investment community ,features of bonds, clearance and settlement and
payment systems
• Underwriting Agreement
• Fiscal Agency Agreement
• Purchase Agreement
• Global Note
Initial Phase – Bonds issued under “Regulation S/144A” under the US Securities Act
which allow for sale offshore and to qualified institutional buyers in the USA
Since December 1991 US$ bonds issued under Schedule B Registration Statement
with the US SEC
February 2002 – issued under “Shelf” Registration Programme
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Execution Strategy
Shelf Registration facilitates registration of securities intended for future
issuance
o Greater flexibility
o Ability to access international capital markets at very short notice
o Ability to take advantage of favourable market conditions
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Composition of External Creditors
March 2008
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Relationship with External Players
External Creditors
• Multilaterals & Bilaterals
Loans from Multilaterals & Bilaterals for project Financing
• Commercial Banks
also supply loans mainly for suppliers credit
• Investors
Invest in Eurobonds
Conference calls
Roadshows
Provide information on web-site
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Relationship with External Players
Lead Managers
• Provide market intelligence on an ongoing basis
• Structure Bond issues
• Provide Pricing indication for new issues
• Propose appropriate marketing & distribution strategy
• Arrange Investor roadshow
• Provide coverage on Jamaica’s credit story
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Relationship with External Players
Rating Agencies
• Annual/quarterly review
• On going dialogue
• Quarterly conference calls
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Questions?
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