Private bond market launches with GHL listings

INSURANCE CONGLOMERATE Guardian Holdings Limited, GHL, listed two securities on the JSE Private Bond Market platform on Tuesday, the first company to utilise the platform that went live in January.

The two bonds include the GHL Tranche B 6.50% fixedrate, unsecured note valued at $1.9 billion, and GHL Tranche D 7.00% fixed-rate, unsecured note valued at $5 billion. They formed part of a wider $13.4-billion debt raise brokered for Guardian by related company NCB Capital Markets Limited.

“These two tranches account for 52 per cent of the total raise and will result in the listing of bonds of a total nominal value at $7 billion. This was deliberate, as the higher outstanding amounts promote room for trading,” said Eric Hosin, president of Guardian Life, about the offer, adding that the transaction gives investors liquidity and a quick exit and entry.

Guardian Life is a Jamaican subsidiary of Trinidad-based GHL. The insurance conglomerate is majority owned by Jamaica’s NCB Financial Group.

The JSE Private Bond Market is the latest initiative to widen and modernise Jamaica’s capital markets. The Jamaica Stock Exchange portal will facilitate the trading of these assets by brokers and accredited rich investors. NCB Capital urged other corporates and conglomerates to list on the platform at Tuesday’s listing ceremony for the GHL bonds.

“The benefits include greater price discovery, transparency, efficiency, and the promotion of greater liquidity for these securities, and it should redound to better pricing of securities,” said the brokerage’s head of investments, Herbert Hall.

Investor participation in Jamaica’s private bond market, otherwise called private placements or the exempt distributions market, is limited by regulation to rich and sophisticated investors and, as such, issuers are not required to produce prospectuses. The targeted investors are usually persons with a high net worth and institutions, such as pension funds.

By listing the instruments, more persons will get the opportunity to trade in them, and for those who hold the debt securities, it increases the bonds’ liquidity and opens up the opportunity for early exit from such investments.

“We expect [the market to] be buoyant and fulfil the objective of giving companies with the ability, to list their securities, and providing qualified investors with the opportunity to invest in instruments … in a regulated environment,” said JSE Group Managing Director Marlene Street Forrest.

The placement market is currently valued at $480 billion, or about a quarter of the $1.7 trillion of equities that trade on the JSE’s various markets.