RPT-UPDATE 2-Jamaica prints lowest coupon in milestone market return

Tue Jul 1, 2014 5:49pm EDT

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By Davide Scigliuzzo

NEW YORK, July 1 (IFR) - Investors gave Jamaica a strong vote of confidence on Tuesday, placing US$4bn of orders for the Caribbean nation's new dollar bond, seen a milestone in the nation's economic recovery.

The SEC-registered issue, Jamaica's first new international benchmark bond since 2008, follows an IMF program and two domestic bond restructurings in the last four years.

The country raised US$800m through the bond, which priced at a coupon of 7.625%, the sovereign's lowest ever on an international bond issue.

Proceeds from the issue will repay upcoming debt maturities, including a 10.5% 150m bond due in October 2014 and a 9.0% US$300m note due in June 2015.

According to a source familiar with the government's thinking, the remaining funds will likely be used to retire some of the country's other high-coupon bonds outstanding.

Rated Caa3 By Moody's and B- by S&P and Fitch, the new notes have a final maturity in 2025, but will amortize in three equal installments in 2023, 2024 and 2025.

The strong order book, driven by real-money accounts, allowed Jamaica to set final terms at 7.625%, below the revised guidance range of 7.75%-8.00% and tight to initial price thoughts (IPTs) of low 8%s.

The sovereign appeared to offer a concession of just 7.5bp over its outstanding 9.25% 2025 notes, which were spotted trading at a yield of around 7.55% before the new deal was announced.

The new notes were trading up in the grey market on Tuesday, quoted up between 0.75 and 1.2 points, according to a trader.

BNP Paribas and Citigroup are the bookrunners on the transaction. (Reporting by Davide Scigliuzzo; Editing by Natalie Harrison)

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