Category: Regions

Despite a strong record of debt repayment, Jamaica says current bond spreads are too high for the sovereign risk. “We strongly believe that the cost of financing is more than it ought to be, even when objective factors are considered,” says Omar Davies, Jamaica’s minister of finance and planning. “Despite serious fiscal challenges, most of [the Caribbean countries] maintain excellent repayment records . . . But the international financial market place has not factored this element sufficiently into its pricing decisions,” says Davies. Though he praises international capital markets for relative speed and absence of conditionality, costs are too high, especially for long term infrastructure projects. “A concern to us in Jamaica, which is directly linked to the cost of financing, is the perception of risk in the region.” Small size, lack of diversity in the economy, exposure to natural disaster are the main issues, Davies adds. According to the minister, Jamaica saw 6% inflation and under 10% unemployment for the first time in 30 years in 2006. He is upbeat about the outlook for 2007, predicting 6%-7% inflation and 3% growth, with a decrease in debt. Davies does not expect disruption from the election. “There is absolutely no reason for any expectation of any change in the fundamental macro economic policies,” says Davies. He was speaking at the Caribbean Investment Forum in Montego Bay, a LatinFinance/Euromoney conference.

Trinidad and Tobago’s National Gas Company (NGC) is planning a return to the international markets, Daniel Sankar, vice president of finance and information management at NGC, tells LatinFinance. A $195m issue with a 15-year average life is expected to hit the market at the start of the third quarter. Sankar says he favors bond financing over the bank market and is mulling a reopening of a bond issued last year through Citi and Lehman. No mandate has yet been awarded.

Trinidad and Tobago is getting pitches for external borrowing, but is not looking to issue any time soon. “We have been approached by many financial institutions,” says Janette Cupid-St. Hilaire, director of public sector finance at the T&T Ministry of Finance. “We do not need to borrow to maintain a presence in the market.” She adds that the sovereign will continue to refinance and that there are maturities in 2009, 2014 and 2020. T&T has been refinancing domestic debt in the local markets. “Borrowing at low interest rates encouraged more borrowing, and that exacerbated the debt problem,” says Cupid-St. Hilaire, speaking of international EM issuance in general.