Jamaica Extends Exchange Deadline

Jamaica has extended the deadline for its JAD700bn ($7.86bn) domestic debt exchange. A new deadline and an indication of the acceptance rate were expected Wednesday, but had not been released as of the end of the day. The original deadline was January 26. “The government has received an overwhelmingly positive response to the offer, with substantially all institutional investors supporting the transaction,” finance minister Audley Shaw says. However, the government notes that local retail brokers have requested an extension. Also, Jamaica’s request for a $1.3bn 27-month standby agreement from the IMF will go to the IMF’s executive board Feb 3, and not this week, as initially expected. The IMF facility is seen as essential to mitigating possible secondary effects of the swap on the economy, such as FX pressure and liquidity at the island’s financial institutions. In the deal, local investors are being asked to voluntarily exchange non-treasury bill government bonds in a 1-for-1 swap for securities with longer tenors. Over 350 securities would be consolidated into 23 new benchmark bonds, according to Fitch. The maturity extension should be an average 2.5 years, according to RBS. Interest rates – which run as high as 28% on the existing bonds – should be lowered from an average of 18%-19% to 12%, RBS says. The government claims the operation will save JMD40bn annually in interest payments. Citi is managing the process.