Reflecting the receipt of the allocation of special drawing rights (SDR) equivalent to US$303 million from the International Monetary Fund, Jamaica's net international reserves (NIR) rose to US$1.93 billion at the end of August.

At its current level, the NIR is sufficient to cover 15.16 weeks of goods and services imports.

According to the Bank of Jamaica, the allocation will be recorded on both the asset and liability side of the bank's balance sheet. However, because "the liability is not of a short-term nature", the NIR has increased to reflect the allocation.

Of note, minus the SDR allocation, the country's reserves would have fallen by just under US$18 million. Jamaica also received another US$27.4 million on September 9 to bring the total SDR allocation to US$330 million.

REMITTANCES DOWN

In July, remittance inflows continued to be impacted by the softness in the global economy, falling 13.1 per cent, or by US$41.1 million year over year, to US$153.9 million. At the same time, a 2.2 per cent increase in outflows meant that net remittances were actually down 15.9 per cent for the month.

In the seven months to July, remittance inflows were actually down 15.5 per cent to approximately $1.0 billion, and are likely to continue reflecting rising unemployment in the United States, Canada and the United Kingdom.

In August, US unemployment rose to 9.7 per cent from 9.4 per cent the previous month, while unemployment in Canada was up 0.1 per cent to 8.7 per cent.

LOCAL BOND MARKET

The Government issued a 15-month fixed-rate bond that closed on Friday, September 11, the Government of Jamaica (GOJ) Fixed Rate Investment Debenture 2010 Series Bw, at an annual rate of 18 per cent.

Interest will be paid semi-annually March 9, 2010. The third and final payment will be at maturity on December 9, 2010.

For this week, the Government will be offering the Investment Debenture 2011 Series Bx on September 16-18, 2009, on which interest will be fixed at 18.125 per cent per annum for 18 months.

The first interest payment will become due and payable after seven months, on April 15, 2010. Thereafter, interest will be paid semi-annually on October 15 and April 15, until maturity on March 15, 2011.

The final interest payment will cover the period October 15, 2010, to March 15, 2011, and will be paid on March 15, 2011.

The Government will be auctioning a three-month Treasury bill on September 16. The August bill was 16.72 per cent.

GLOBAL BOND MARKET

The trading of the Government of Jamaica bonds showed moderate market activity even though there were more buyers than sellers.

There was continued demand for the GOJ eight per cent Eurobond 2019 and the Air Jamaica 9.375 per cent Amortising Notes 2015 which traded up to $83 and $93, respectively.

The GOJ 8.5 per cent Global Bond due in 2036 continues to see strong demand, and even though minimal trade was executed, bids got to as high as $70.

On the other hand, the GOJ eight per cent Global Bond 2039 was being offered for $68.75 to $69.25, but demand was almost non-existent at those prices.

For other global bonds within the region, the Petroleum Corporation of Trinidad and Tobago 9.75 per cent Bond 2019 was being offered at a price of $110.50 to yield 8.18 per cent, while the PetroTrin six per cent Bond 2022 was being offered at $92, to yield 7.58 per cent.

Both prices went up by $1.00 and $0.25, respectively.

Additionally, the Government of Barbados 7.25 per cent Global Bond due in 2021 saw the last offer price at $101.50, yielding 7.06 per cent.

The GOB 2021 is not traded often, but as soon as there is an offer close to par ($100), it gets traded quickly.

FOREIGN-EXCHANGE MARKET

The foreign-exchange market saw almost nil in inter-dealer trading as trading went straight to the end-user.

Buy-and-sell volumes have been low, with a total US$79 million of USD bought, and US$89 million sold on the market.

USD supplies remained extremely tight.

The weighted average selling rate for the USD closed this week at $89.07/US$1.

STOCK MARKET REPORT

Trading in the local-equities market saw an improvement when compared to the previous week. A total of 39,439,976 units traded valued at $97.9 million.

The JSE Market Index advanced by 595 points, or 0.75 per cent, to close at 80,424.86 points. Overall market capitalisation increased by $4.4 billion to close at $598.32 billion.

COMPANY NEWS

GraceKennedy Limited injected J$900 million of new capital into First Global Bank after disclosures of irregular activities and breaches of internal procedures at the bank. The capital injection ensures that the bank comfortably exceeds the capital base to total assets ratio as required by the regulators.

The Jamaica Livestock Association (JLA) has advised that an extraordinary meeting will be held September 24 at noon to consider and a resolution that, if passed, would authorise the sale of the JLA's feed mill, wharf, grain off-loading facilities and related spare parts under a US$6 million (J$534 million) deal with Agro Industries Holdings (2008) Limited.

Paula V. Brown is executive wealth adviser at NCB Capital Markets Limited.

brownpv@jncb.com