Massive growth in private bond market

3 years ago

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Minister of Finance and the Public Service, Dr Nigel Clarke, says Jamaica’s private securities market grew by approximately 100 per cent between 2017 and 2020, with the value of bond issuance transactions doubling from some $200 million to $400 million.

He said that when compared to the banking sector, which recorded loan growth ranging between 16 and 35 per cent over the period, this indicates that

“we are [undoubtedly] in a period of time where we are seeing an explosion of interest in private securities”.

This, he added,

“gives you [an idea] of the importance of the securities sector to the Jamaican economy”.

Dr Clarke said the reasons for the heightened interest in private securities are two-fold.

On one hand, he said, the Government’s appetite for borrowing has receded

“as we have gotten our fiscal house in order and are pursuing our objectives in a very responsible, transparent and accountable way that assures debt sustainability for this and future generations”.

This, he pointed, out has resulted in surplus funds becoming available for other activities.

“There was a time when the Government would have crowded out the private sector with its voracious appetite for borrowed credit from the local market. That being subdued, we are seeing [where] it has provided the opportunity for those funds to be channelled to the private sector through means such as private bond issues,”

he said further.

Additionally, Dr Clarke said there have been “deliberate” efforts by the Government through key stakeholders such as the Bank of Jamaica (BOJ) and Development Bank of Jamaica (DBJ), regulatory authorities like the Financial Services Commission (FSC) and now the JSE, to improve the ecosystem to facilitate increased access to funds.

“So [when] you put those two factors together… they account for the massive growth in the private bond market that we are seeing and that we will continue to see,”

he added.