Category: Top stories: Local

The international ratings agencies followed through to place Jamaica in default on announcement of the $700 billion debt-exchange programme, JDX, that is recalling 350 domestic bonds.

BEARING in mind the overall exposure of bank of Nova Scotia to Jamaica’s sovereign debt, it is appropriate that the first international analyst to respond to Jamaica’s proposed debt deal was Scotia Capital’s New York based Joe Kogan, who sent out his response only one hour after the end of the PM’s speech on Wednesday night.

The Jamaica Debt Exchange may not be perfect, but this move by the Government to begin to rein in its debt interest payments reflects well the idea that “the perfect is the enemy of the good”.

The International Monetary Fund (IMF) has, in principle, approved Jamaica’s request for a US$1.3-billion standby agreement. However, the deal will still need the stamp of approval of the executive board of the fund before Jamaica begins to draw down on the money.

Key stakeholders in the financial sector yesterday warned the Bruce Golding administration that they would not let his Government off the hook if it fails to deliver on its promise of a prudent fiscal-management programme to supplement the debt-exchange initiative.

Fitch Ratings yesterday downgraded Jamaica’s long-term local currency rating to ‘C’ from ‘CCC’. In addition, Fitch has affirmed Jamaica’s long-term and short-term foreign currency ratings at ‘CCC’ and ‘C’ respectively, and affirmed the Country Ceiling at ‘B-‘. Jamaica’s sovereign ratings Outlook remains Negative.

THE recently announced Jamaica debt exchange offer which sees 350 instruments reduced to just 24 offering an interest rate of 12.25 per cent may — albeit inadvertently — help to spur the Jamaican economy into greater productivity, innovation and entrepreneurship.

Business confidence among Jamaican firms improved in the last quarter of 2009, but consumer confidence continued to decline, researcher Professor Richard Curtain said Tuesday.

In a test of the market on Tuesday, the Government of Jamaica floated a two-month treasury bond that is not only significant for its tenure but was priced at a fixed 12 per cent per annum, in line with goals of the new debt management initiative (DMI).

GOVERNMENT has essentially already secured 15 per cent of the support it will need for its planned debt exchange transaction that will involve the swapping of over $720 billion in its domestic debt for lower yielding bonds.