Category: Caribbean

Jamaica, which has EUR200m of debt coming due in February 2009, is considering all options to pay down the notes, including a private placement, Audley Shaw, the country’s finance minister, tells LatinFinance. The notes are trading to yield around 8%. “The first priority is to issue in the capital markets because that’s where we can get the longest maturities,” says Shaw. The bond market for single B issuers has been all but closed for the past several months and if that continues Jamaica may be forced to consider other options. “I want to refinance at 6%-7% – with 8% being the absolute maximum,” says Shaw, who notes he would consider issuing privately, where lower yields could be achieved if the public markets are still demanding a premium. Shaw says he will put out an RFP to banks in the coming months.

Ex-Bear Stearns head of trading and senior MD Adam Groothuis – a veteran in the underserved CentAm and Caribbean secondary markets – has left JPMorgan, where he was employed for just two days. The departure, apparently to Royal Bank of Scotland, is further evidence of JPMorgan’s failure to bolt Bear’s strong Caribbean franchise onto its existing LatAm presence. John Joseph, a fixed income salesperson, is also heard accepting a JPMorgan job before moving to RBS, while ex-Bear trader John Modell followed the same route to Barclays. Veteran banker AJ Mediratta, former senior managing director and head of international debt capital markets at Bear, meanwhile jumped to the buyside. He is rolling out a new LatAm dedicated private equity vehicle focused on high yield projects for New York-based hedge fund Greylock Capital, targeting a $400m-$500m raise. Meanwhile, ex-senior managing director Carl Ross – Bear’s well known former head of research – has moved to Oppenheimer, the integrated financial services holdings company, where he is a managing director at its Atlanta International subsidiary. Groothuis, Mediratta and Ross have strong client relationships and were instrumental in building Bear’s Caribbean niche.

LatAm and the Caribbean received a record $106bn in FDI last year, according to the UN’s economic commission for the region, ECLAC. The figure is the highest since 1999, when investment totaled $89bn and flows were linked to privatizations, the commission says. The main recipient of investment in 2007 was Brazil, with $34.6bn, followed by Mexico with $23.2bn and Chile with $14.5bn. The leading foreign investors in LatAm in 2007 were the US, Spain and the Netherlands, ECLAC says. On a separate note, the multilateral estimates economic growth for LatAm and the Caribbean will be 4.7% in 2008, as deceleration of the world’s economy will have a limited impact.

Caribbean countries will depend on their ability to maintain a high level of investment as they enter the hurricane season amid a global economic downturn that could hurt tourism and remittance flows, according to S&P. The sustainability of both domestic and foreign investment is especially important because exports, the other main driving force for GDP growth, are becoming more vulnerable to the negative external environment, says the agency. “Overall, we expect the commitment to fiscal consolidation to prevail, increasing policymaking transparency to boost investor support, and a timely monetary response to help maintain stability in the exchange market,” says S&P. All this should afford the small and open Caribbean economies “adequate protection against the rising winds from the North,” notes S&P, referring to hurricanes and economic turbulence.

Trinidad & Tobago has no plan to return to the markets with a sovereign issue, Vishnu Dhanpaul, deputy permanent secretary of the country’s ministry of finance, tells LatinFinance. However, the government expects to assist and act as a guarantor for government-owned entities. An issue from the rapid rail system of Trinidad will happen in 2009, Dhanpaul states, while deals for the water and sewerage authority, the Power Generation Authority of Trinidad & Tobago, as well as oil and gas companies NGC and Petrotrin are in the works, Dhanpaul says. He adds that no date yet has yet been set. The last time T&T issued a sovereign bond was in 2000, with a refinancing in 2006 for EUR150m. In a recent interview with LatinFinance, NGC president Frank Look Kin says his firm company does not have need for a government guarantee to access financial markets.

Bear Stearns is recommending Trinidad and Tobago’s bonds based on the country’s financial resilience. “We view T&T as a strong story in the current environment of risk aversion and maintain our outperform recommendation on T&T bonds,” the shop says. “Current account and fiscal surpluses, policy stability (in contrast to some other oil countries) and high oil prices should provide strong buffers against the global shocks we are currently experiencing,” Bear states.

S&P has cut Puerto Rico-based Caribbean Restaurants (CRI) to CCC+ from B. The outlook remains negative. “The downgrade reflects the distinct possibility that the company will breach financial covenants of its bank facility at its fiscal year-end,” says S&P credit analyst Jackie Oberoi. The fiscal year ends April 30 and the covenants become increasingly restrictive at the end of July. “The downgrade also reflects the company’s continued weak performance, which has been driven by a soft Puerto Rican economy coupled with increased labor, utility, and commodity costs,” adds Oberoi.

Jamaica’s finance ministry begins today a “non-deal” roadshow hitting New York and Boston and wrapping up Thursday. According to bankers with knowledge of the show, the sovereign is assessing 2008 borrowing needs ahead of the end of its fiscal year in March. Jamaica will have to cover $413m in amortizations in 2008, according to Fitch estimates based on government data. It has a EUR200m issue coming due in February 2009. Jamaica has $3.1bn in outstanding debt, according to Fitch, which gives a B+ rating to the sovereign debt. Deutsche Bank and Morgan Stanley are managing the tour.