JPMorgan Likes Jamaica

JPMorgan has upgraded Jamaica’s external debt to neutral from underweight in its EMBIG model portfolio, citing possible support from the IMF, attractive yields, and recent positive economic developments. The shop believes Jamaica could sign a stand-by arrangement with the IMF and says the government and the Fund are already in talks. It also says tourist arrivals were up by 2% during the winter season, and FX reserves rose for a second consecutive month after dropping 30% since August. Jamaica’s global bonds have returned 6.1% since February 10, versus an 8.2% rise in JPMorgan’s regional CACI’s index in the same period, and a near 12% gain for the EMBIG. The currency has also stabilized to around JMD88-89 per dollar after dropping 23% between October and March. JPMorgan sees Jamaican bonds as attractive for less risk-averse investors, but has bought 0.75m of Jamaica 2039s at $67 for its EMBIG model portfolio.