Jamaica tests waters with cheaply priced bond sale

jueves 23 de julio de 2015 10:52 GYT

By Paul Kilby and Davide Scigliuzzo

NEW YORK, July 23 (IFR) - Jamaica came to market on Thursday with an attractively priced two-tranche bond sale, looking to raise at least US$1.5bn to retire debt owed to Venezuela and improve its credit metrics.

The offering, which consists of 2028 and 2045 bonds, is geared to sell, with leads Bank of America and Citigroup setting price talk of high 6%-7% and 8.25% area, respectively.

The deal is likely to ease the sovereign's amortization schedule, which is already particularly heavy in 2025.

But the question is whether the pricing makes sense, as Jamaica (Caa2/B/B-) will use proceeds to buy back some US$3bn in PetroCaribe debt owed to Venezuela at a steep discount of US$1.5bn.

"Based on the initial price thoughts the deal is very cheaply priced," said a banker away from the trade.

The new 30-year is coming some 150bp wide of the Caribbean nation's longest outstanding bond - an 8% 2039 that is being quoted with a mid-market yield of around 6.75%.

The 2028s are likewise offering a decent pick-up to the outstanding 7.625% 2025s, which have been trading at a mid-market yield of around 5.875%.

"It is hard to imagine that this is net present value-positive," one investor told IFR.   Continuación...