The Government of Jamaica’s intention to raise some US$1 billion through the issue of a Diaspora bond in August is already generating significant interest from Jamaicans living overseas.
This was disclosed by Minister of Industry, Investment and Commerce, Hon. Anthony Hylton, during a presentation to captains of industry and investors at a business forum on Thursday March 22, at the Jamaica Pegasus hotel in New Kingston.
Selling bonds directly to the Jamaican Diaspora is intended to attract a share of the estimated US$5 billion saved annually by nationals and persons of Jamaican descent living abroad.
The investment concept involves marketing and selling the bonds to an estimated two million plus Jamaicans in the Diaspora as an alternative to sourcing of hard currency by way of global bonds issued by the Government to relatively few large foreign institutions.
According to the Minister, the bond issue, which is supported by the World Bank, is set to coincide with the 50th anniversary of Jamaica’s independence in August this year.
In addition, the issue during that month, is expected to benefit from the performance of Jamaica’s athletic team during the London Olympic Games.
The Government has stated its intention to provide oversight of the use of bond proceeds in order to convince potential investors of its credibility.
With the current rates of return in the United States below one per cent compared to the Government of Jamaica benchmark instrument offer of some 10 per cent, even with the exchange rate spread and depreciation, investment advisors expect that a four per cent yield, or possibly lower, could result in considerable take-up of the Jamaican Diaspora bond.
In February last year, during the Government’s bond issue, US$400 million was raised at a record low of eight per cent.