Jamaica US$1b bond raise reflects post-Melissa confidence, says finance minister

Jamaica raised US$1 billion from the international capital markets on Wednesday at a coupon of 6.25 per cent, the lowest coupon the country has paid on an international bond.

It was the government's first US dollar issuance in more than a decade and its first benchmark transaction since Hurricane Melissa struck in October 2025, causing damage exceeding half of Jamaica's annual output.

"Less than a year after a storm that caused damage and loss equivalent to more than half of our Gross Domestic Product (GDP), international investors have chosen to lend to Jamaica at a rate that reflects confidence in this country and in the discipline Jamaicans have shown over more than a decade," Finance and Public Service Minister Fayval Williams said. The minister attributed that confidence to Jamaican families and businesses, earned through years of difficult fiscal decisions.

Investors bid about 2.5 times the amount on offer, and the Government took the full US$1 billion it had authorised. It has used the proceeds to retire the more expensive bonds it bought back this month, with the remainder going towards budgetary financing for the 2026-27 fiscal year.

The issue completes the second phase of a liability management operation the government launched on September 2 and closed on September 9. It invited holders of three outstanding global bonds — the 6.750 per cent notes due 2028, the 8.500 per cent notes due 2036 and the 8.000 per cent notes due 2039 — to sell their holdings back for cash, some US$2.3 billion of combined outstanding principal.

Holders kept most of it. The government accepted US$491 million, about a fifth of the debt it had invited, and declined to bid higher. It "accepted tenders at levels it considered appropriate and did not pursue repurchases at prices above these levels", it said.

Institutional holders had reasons to sit tight, according to Kerice Gray, manager of the Global Markets and Digital Asset Trading Department at VM Wealth Management. Although the government offered to buy above par, its price still sat well below where the longest bond had traded. The 2039s went "well north of 140" after the COVID-19 pandemic, Gray stated in a Financial Gleaner column earlier this month, and the government offered 118 — a level that would "force many institutional holders to crystallise massive balance sheet losses".

Citigroup and Scotiabank acted as dealer managers on both legs. The new bond repays in three roughly equal instalments, carries semi-annual interest from 2027, and lists on the Luxembourg Stock Exchange.

A portion of the higher-coupon debt stays in the market. Those bonds "will continue to be serviced in accordance with their terms and may be considered for future liability management transactions, subject to prevailing market conditions", the government said.

business@gleanerjm.com