NCB Financial Group is floating two corporate bonds to raise $3.5 billion, but with the option of upsizing the offer to $5.2 billion, and plans to list both securities on the Jamaica Stock Exchange.
The bonds being arranged and brokered by NCB Capital Markets, a member company of NCB Financial, will be issued in equal tranches at coupon rates of 10.75 per cent and 11.75 per cent, pricing that reflects that bond yields have been on the rise amid more than a year of aggressive hikes in the signal interest rate by the central bank. That rate is currently set at 7.0 per cent.
The subscription period for the bonds runs from January 12 to 30. Investors can participate with a minimum of $100,000 and are allowed to trade minimum blocks of $10,000.
NCB Financial expects interest rates to continue on a high going forward due to global uncertainty.
“In 2023, as the primary effects of the pandemic fade, the pace of economic expansion will be expected to slow across our markets,” the financial conglomerate noted in its newly released annual report. “While the recovery augurs well for business performance, expectations for further increases in interest rates in Jamaica and the US, one of the region’s key export markets, are likely to keep trading gains depressed due to lower bond prices, compressing the margins in our securities business. As a result, high-interest rates could challenge loan demand and fixed-income capital market transactions,” the report said.
The first tranche of the new bond will mature in two years, at the end of January 2025, while the second matures a year after that, in January 2026. However, NCB Financial has the option of an early redemption of the bonds with a month’s written notice.
The banking group indicates that it will maintain its regulatory minimums during the bond’s tenure for its various regulated subsidiaries in Jamaica, inclusive of the bank’s capital to risk-weighted assets of 10 per cent and liquidity coverage ratio of 100 per cent, as prescribed by the Bank of Jamaica; and a capital ratio of 10 per cent for NCB Capital Markets, and minimum thresholds of 175 per cent for Guardian Life Limited and 250 per cent for Guardian General Insurance Jamaica Limited, as stipulated by the Financial Services Commission.
NCB Financial Group holds $198 billion in capital amid $2 trillion in total assets. Its main businesses include National Commercial Bank Jamaica, NCB Capital Markets and Trinidad-based Guardian Holdings Limited and its subsidiaries.
steven.jackson@gleanerjm.com
