LATAM WRAP-Jamaica takes center stage with US$2bn bond sale

jueves 23 de julio de 2015 15:50 GYT

By Paul Kilby

NEW YORK, July 23 (IFR) - Jamaica was poised to raise US$2bn through a dual-tranche bond sale on Thursday, adding much-needed supply to what has been a lackluster primary market in Latin America.

The offering, which consists of 2028 and 2045 bonds, saw order books swell to around US$4.5bn as investors took a shine to a deal offering a nice pick-up to the sovereign's curve.

The healthy demand allowed leads to squeeze pricing on the longer-dated tranche by a good quarter point before launching a US$650m 2045 to yield 7.875%, the tight end of 8% area guidance and inside initial talk of 8.25% area.

Jamaica, Caa2/B/B-, is also set to garner US$1.35bn from the 2028, which was launched at 6.75%, the lower end of 6.75%-6.875% guidance and inside preliminary talk of high 6s-7%.

The decision to load up on the shorter but less expensive tranche made sense as the sovereign is using proceeds in part to retire approximately US$3bn of PetroCaribe debt owed to Venezuela at a steeply discounted price of US$1.5bn.

The liability management transaction is part of the government's efforts to improve its credit metrics as it undergoes a fiscal adjustment program.

Debt to GDP would have dropped from 136.7% to 126.3% for fiscal year 2014-2015 if the debt had been retired earlier this year, according to an investor presentation.

Seen as an improving credit story, Jamaica has enjoyed recent upgrades from both S&P and Moody's, which now rate the sovereign at Caa2 (Positive) and B (Stable).   Continuación...