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Debt buyback - IMF hails Jamaica's retirement of US$3 billion owed to Venezuela

Published:Thursday | July 23, 2015 | 12:00 AMMcPherse Thompson
Dr Peter Phillips

The Ministry of Finance and Planning has confirmed that the Government has reached an agreement on a deal with Venezuela to repurchase billions of dollars it owed for oil under the PetroCaribe arrangement.

In correspondence yesterday afternoon, the ministry indicated that Jamaica has set final yields on a US$2-billion dual-tranche bond sale, after order books reached US$4.5 billion.

The Government had launched a US$1.35-billion 2028 bond to yield 6.75 per cent and a US$650-million 2045 bond to yield 7.875 per cent.

Bank of America and Citigroup had earlier released guidance at 6.75 per cent - 6.875 per cent on the 2028 and eight per cent (+/-0.125) on the longer-dated bond.


US$1.5 billion buyback


Proceeds are to be used in part to retire some US$3 billion in PetroCaribe debt owed to Venezuela at a price of US$1.5 billion.

Yesterday, the International Monetary Fund (IMF) said it fully supported the transaction on the debt buyback.

"We welcome the Jamaican Government's proactive move to manage its debt and its continued commitment to economic reform," Gerry Rice, director of the IMF's communication department, said during a press briefing in Washington.

"The IMF fully supports the transaction announced today. The buyback is firmly anchored in the goals of the Government's reform programme," he said, adding that "it is an important step in reducing the value of the country's public debt and will help to put debt firmly on a downward trajectory".

As at May this year, the total stock of public debt stood at J$2.04 trillion, with external debt accounting for US$8.51 billion. The total debt was calculated at a rate of J$116.12 to US$1.

Rice said going forward, full implementation of the ongoing four-year economic reform programme by the Jamaican authorities should help maintain access to international financial markets at favourable terms.