Sat | Jan 23, 2021

$7b listings to kick-start private bond trading platform

Published:Wednesday | January 13, 2021 | 12:08 AM
Managing Director of JSE Group Marlene Street Forrest.
Managing Director of JSE Group Marlene Street Forrest.

Two debt securities valued at $7 billion will list later this month on the JSE Private Bond platform that was launched on Monday by the Jamaica Stock Exchange.

“NCB Capital has in fact received a listing for two existing corporate bonds. The total amount has an outstanding value of $7 billion,” said Stacy-Ann Tait, vice-president of investments at NCB Capital Markets Limited, in her address at the online launch of the platform. “That’s a nice way to kick-start the market.”

Tait did not identify the issuer of the bonds, but described the entity as a strong blue-chip company. It’s expected that Guardian Holdings Limited – a Trinidadian company, which like NCB Capital is owned by Jamaican financial conglomerate NCB Financial Group – will be the first to list on the private bond market, but NCB Capital declined to confirm or deny the information.

The JSE Private Bond Market is the latest initiative to widen and modernise Jamaica’s capital markets. The JSE portal will facilitate the trading of these assets, also known as private placements, by brokers and accredited rich investors.

For more than a decade, brokers have been able to arrange placements on behalf of corporate clients, for working capital and other purposes. Such placements done under exempt distribution guidelines developed by the regulator, Financial Services Commission, are only open to subscription by rich or sophisticated investors and institutions, and as such, issuers are not required to produce prospectuses. The placement market is currently valued at around $480 billion, or about a quarter of the $1.7 trillion of equities that trade on the JSE’s various markets.

JSE Group Managing Director Marlene Street Forrest said the new platform opens up opportunities for new listings and more securities for qualified investors to trade, it will need enhancements over time.

“As we launch the private market today, we realise that it is not a perfect market. We know that as with the other markets, we may be required to lobby for the introduction of companion laws or changes to regulation to enhance its efficiency,” said Street Forrest. “Today, however, we begin the journey and understand that the conversation continues for future facilitation, whether from our brokers, issuers, government or the JSE Group.”

The private bond platform builds on separate market initiatives, including a new trading and surveillance platform, the development of the Jamaica Social Stock Exchange platform, the implementation of a new fund management system, the pilot on the trading of digital currency, a new mobile app for apple devices, the online trading phase three, and the upgraded JSE eCampus website.

“We understand that to build a vibrant private market is an ongoing process, and we welcome you to join with us in this journey as we resolve at the JSE to make a positive and lasting difference within the capital market. The possibilities are endless,” Street Forrest said.

Going forward, the exchange plans to pursue short selling, trading of Government of Jamaica bonds, online trading on mobile devices, and the addition of new member dealers.

steven.jackson@gleanerjm.com