While the final maturity of the main issue is in 2028, the principal is actually to be repaid in three equal tranches in 2026, 2027, and 2028 respectively, effectively spreading out the repayment burden. In contrast, the second smaller 30-year issue maturing in 2045 has just a single "bullet" repayment on maturity.
The use of proceeds from the bonds is to purchase Jamaica's just under US$3 billion in PetroCaribe debt owed to State-owned Venezuelan oil company Petroleos de Venezuela SA (PDVSA) for US$1.5 billion, or a discount of just under 50 per cent. The remaining funds will be allocated for what the prospectus describes as general budgetary financing.
The debt buy-back, coupled with the repayment of existing maturities, is projected to reduce Jamaica's debt-to-GDP ratio to 123 per cent from 137 per cent by the end of the fiscal year in March. The additional US$500 million means that Jamaica's budget is now fully funded, including, particularly, the February 2016 National Debt Exchange maturity.
The deal also appears to give the existing PetroCaribe fund some welcome investment flexibility, as it essentially cancels half its liabilities.
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