Some local investors have failed to receive payment due to them from investment made in a Government of Jamaica €200-million bond (J$22.6 billion), which should have been paid last Wednesday.

Total principal and interest payment due was €221 million (J$24.9 billion), as stated by a Ministry of Finance and the Public Service release, in which the government said it had credited the paying agency, Deutsche Bank AG, Frankfurt, on February 10.

"It's just a matter of wiring the funds, mostly a glitch on the part of the bank and is nothing significant," said Nigel Sinclair, senior risk/research analyst at Guardian Asset Management Ltd.

"(There are) no implications ... as the government had to fulfil its obligations," he added.

No reason for the delay in crediting investors' accounts has been given by Deutsche Bank. Subsequently, the government said that investigations were under way to ascertain reasons for local investors not being paid.

Not an issue

Sinclair's arguments were corroborated by Mayberry Investments senior research manager, Rex Shettlewood, who said that the non-payment was not an issue, as funds are released through a clearing, house mechanism. He expected that investors' accounts would be credited shortly.

"(It is) not a big concern given how the settlement process is done; it is just a matter of how the transfer of funds is done," said Tyrone Brown, research analyst at Barita Investments Ltd. "If it is not credited by mid next week, then at that point, it would be a reason for concern," he said.

Heightened concerns

But last year, international rating agency Fitch had downgraded Jamaica to a 'B' from a 'B+', citing heightened concerns for the country's downside credit risks. The agency had also expected the finance ministry to face difficulty in financing the same €200 million-bond, given the freeze in the international credit market.

Since then, the government has managed to raise funds from multilateral agencies, such as the Inter-American Development Bank, with the signing of a US$329-million loan last month, which allowed the government to meet its debt obligations.

Just this week, there was another signing between the Chinese and Jamaican governments for a US$100-million line of credit, to be routed through the Export-Import Bank.

The euro bond, on which coupon payment was due on February 11, was issued at a variable interest rate of 10.50 per cent in August 2006, a 20-year bond not set to mature until 2026-27.

The country's total external debt stock is $510.5 billion as at December 2008.