04 Dian Black

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www.mof.gov.jm/dmu 1

Interaction of the Debt Management Office in

Jamaica with the International CapitalMarkets

4th Annual Meeting of Latin American & the

Caribbean Public Debt Management Specialists

Port of Spain, Trinidad & Tobago

May 14-16, 2008

Dian Black

Ministry of Finance and the Public Service

Kingston, Jamaica


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Contents

Introduction

External Financing & Execution Strategy

Composition of External Creditors

Relationship with External Players in the

International Capital Markets (ICM)


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Introduction

Government of Jamaicas medium term

borrowing programme guided by medium

term Debt Management Strategy

Debt Management objective To raise adequate levels of financing on behalf of the

Government of Jamaica at minimum costs, to develop

and implement strategies to ensure the long-termsustainability of the public debt while maintaining risk

at an acceptable level.


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Introduction

Key objectives of the Debt Strategy

Foster a more interactive relationship with the local and

international marketsExtend and smooth the maturity profile of the debt to

better manage refinancing risk

Increase the transparency and predictability of debt

issuance and operationsAddress aspects of liability management


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IntroductionJamaicas total debt J$ 1,000,676.5mn of

which :-

Domestic debt J$ 562,108.1mn ,

External debt J$438,568.4mn

Total Debt/ GDP 126.1%


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External Financing

Jamaica entered International CapitalMarkets (ICM) in 1997

Reasons for entering

Increased domestic interest rates resulting in high levels ofdomestic debt servicing costs

Advantage of lower external interest rates which would facilitatelowering of domestic interest rates

Exit from commercial bank restructuring in 1990 Graduation from Paris club bilateral rescheduling in 1995 no

longer a heavily indebted country


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Execution Strategy

Objective to access the ICM to the extent of gross external amortisation of the

external debt

to maintain good external debt indicators

Use of external advisory service external financial advisors provide valuable information

monitor developments in the markets

interface with investment houses to harness market intelligence

Foster relationship with investors

External Legal Counsel Selection based on range of services to be provided

lowest all-in costs for handling transaction


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Execution Strategy

Timing Monitor market developments with the assistance of the

financial advisors to determine appropriate time forentry

Schedule issues to coincide with maturities Interest ofInvestment house to go to market

Lead Manager

Determination based on Request for Proposals (RFP) RFP sent to financial institutions sometimes receiveunsolicited RFP


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Execution Strategy

Short listing based on the following criteria Low cost financing

Risk minimization

Diversification of investor base

Extension of maturity profile

Selection of Lead Manager based on Terms being offered tenor, currency

Lowest all in cost competitiveness of process helps to keep fees andexpenses low

Country coverage by financial institution

Support from secondary market


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Execution Strategy

Structure and Type of Bonds

Decision based on

Market conditions

Tenor based on portfolio needs, must be consistent with debt strategy objective of extendingmaturity profile of the debt

Ease of execution

Investors interest

Currency US$ usually first choice, - volatile although hedging opportunities exist, exchangerate risk implications

Size based on annual borrowing requirement as well as investors preference institutional

investors prefer liquid instruments while retail investors prefer smaller issues


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Execution Strategy

Marketing Meetings with investment banks to promote Jamaicas credit story

Develop relationship with banks and investment community

Road shows major European and North American cities Usually held at the time of issuance, also non-deal Conference calls

Presentations to investors by lead managers

Publication of research articles by lead managers


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Execution Strategy

Distribution

Geographic distribution initially investors dominated

from USA and Europe broadened to include Latin

America, Caribbean and Gulf states

Mainly Institutional investors Insurance companies,Pension funds, Mutual funds, Hedge funds, Banks,Money managers

Initially comprised of mainly retail investors


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Execution Strategy

Documentation

Offering Circular/ Prospectus

Comprised of historical and financial data ,legal, regulatory and taxation systems, political structure,relationship with the international investment community ,features of bonds, clearance and settlement andpayment systems

Underwriting Agreement Fiscal Agency Agreement

Purchase Agreement

Global Note

Initial Phase Bonds issued under Regulation S/144A under the US Securities Actwhich allow for sale offshore and to qualified institutional buyers in the USA

Since December 1991 US$ bonds issued under Schedule B Registration Statementwith the US SEC

February 2002 issued under Shelf Registration Programme


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Execution Strategy

Shelf Registration facilitates registration of securities intended for future

issuance

Benefits of Shelf Registration

o Greater flexibility

o Ability to access international capital markets at very short notice

o Ability to take advantage of favourable market conditions


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Composition ofExternal Creditors

March 2008


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Relationship with External Players

External Creditors

Multilaterals & Bilaterals

Loans from Multilaterals & Bilaterals for project Financing

Commercial Banks

also supply loans mainly for suppliers credit

Investors

Invest in Eurobonds

Conference calls

Roadshows

Provide information on web-site


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Lead Managers

Provide market intelligence on an ongoing basis

Structure Bond issues

Provide Pricing indication for new issues

Propose appropriate marketing & distribution strategy

Arrange Investor roadshow

Provide coverage on Jamaicas credit story


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Rating Agencies

Annual/quarterly review

On going dialogue

Quarterly conference calls


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Questions?

04 Dian Black

Documents

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