Dennise Williams, Staff Reporter
DAVIES
INVESTORS HAVE embraced the latest Government of Jamaica fixed rate investment debenture which was open from January 13 to the 18th.
The instrument offered 15.75 per cent over 24 months and matures on January 18, 2007. Although the instrument was taxable, according to investment-trading manager at Barita Investments, Sonia Owens "this is one of the best offers out there for long term money market instruments." Short term money market rates, dictated by the Bank of Jamaica's open market rates, range from 13.8 per cent to 15.5 per cent.
Ms. Owens tells Wednesday Business that, "from my end, the response was pretty good. And based on the demand that we got, particularly this afternoon, we think the market embraced the instrument."
TOO CLOSE TO THE
INFLATION RATE
However, not all brokers thought the instrument was a good deal. Earlier in the week another investment broker stated that the instrument was too close to the inflation rate to be attractive. Just recently the Statistical Institute of Jamaica revealed that the inflation rate for 2004 was 13.7 per cent.
In fact, this is the second year that inflation was in double digits with 2003 recording inflation of 14.1 per cent. Thus, investors, real return would be considerably below the rate of inflation after taxes of 25 per cent are accounted for. Despite this, Ms. Owens tells Wednesday Business, "People love to have their money locked away safe somewhere."
She believes that investors should get used to this type of return. "I think that the Government is trying to bring down interest rates even further. But how far depends on if they can bring down inflation rates."
Ms. Owens predicts that the authorities will attempt to bring interest rates down to February 2003 levels when 30 day rates was 12.95 per cent and 365 day rates was 14.5 per cent.
