On January 14, 2010, the Government of Jamaica launched a Debt Exchange Offer (JDX) as part of a medium term economic programme to create a platform for sustainable economic growth.
In summary, the JDX is an offer to all holders of domestic marketable securities, both USD and JMD for a par exchange with no reduction in principal amount, a reduction in interest rates and an extension in the maturity profile of the debt. The Government is targeting 100% participation from all bond holders and hopes to complete this exercise as a precursor to obtaining multilateral funding support total US$2.4 billion.
The Board of Directors of Scotia DBG Investments Ltd met to discuss and review the impact of accepting the Debt Exchange Offer and, after careful consideration of the risks and benefits associated with participation, the Board has made the decision to fully participate in the Offer.
Anya Schnoor, Chief Executive Officer of Scotia DBG Investments, in commenting on the decision, stated, “We feel that our decision to participate in this programme is in the best interest of all our stakeholders as the Debt Exchange Offer forms the basis of economic recovery for our country and its success is necessary to put Jamaica on the path to sustained growth. The alternatives to the JDX, as indicated by the Minister of Finance, are stark and the Board considered that non-participation the offer could present our stakeholders with possibly worse repercussions. We encourage the GOJ to continue implement other aspects of the medium term economic program as the JDX is only the beginning of the long journey ahead. We intend to work closely with the MOF and BOJ to ensure the gains the JDX provides are used in the best of our country.”
While the transaction will have a negative impact on the net interest income earned by Scotia DBG Investments Ltd in the near future, the impact on equity is a reduction of approximately J$94 million 1.15%. Our key capital adequacy ratios will remain significantly above the regulatory requirements after the transaction is completed.
