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Purity Reports Significant Loss for the Year-Ended December 31, 2019 Published: 04 June 2020

  • Consolidated Bakeries (Jamaica) Ltd. (Purity) reported audited net loss of $12.49Mn (EPS: -6¢) for the year ended December 31, 2019, an almost two-fold decline when compared to the $12.96Mn profit made in the corresponding period in 2018.
  • This performance was mainly driven by a 14.3% (or $48.76Mn) increase in total operating expenses.
  • Purity stock price has fallen 1.2% since the start of the calendar year, and closed Wednesday’s trading session at $1.64.  The stock currently trades at a P/B of 0.51x, which is below the Junior Market Manufacturing Sector Average of 2.06x.

(Source: Purity Financials)

Q1 Profit Down at SOS Published: 04 June 2020

  • For the three months ended March 31, 2020, Stationery and Office Supplies (SOS) Limited reported unaudited net profit of $43.80Mn (EPS:18¢), down 23.9% (or $13.73Mn) relative to the same period one year prior.
  • The main contributor to this performance was an 11.4% (or $8.81Mn) increase in administrative and general expenses, and a 433.2% (or $1.51Mn) increase in FX losses.  In additon, for the period the company reported a $1.26Mn impairment loss on financial assets compared with a  $55k gain made in the prior year.
  • The stock has fallen by 42.9% since the beginning of the calendar year. SOS closed Wednesday’s trading session at $6.30 and currently trades at a P/E of 12.9x earnings, which is below the Junior Market Distribution Sector Average of 17.3x earnings.

(Source: SOS Financials)

IMF Executive Board concludes the third review under the IMF’s Extended Arrangement under the Extended Fund Facility for Barbados Published: 04 June 2020

  • The Executive Board of IMF concluded the third review of the IMF’s extended arrangement under the Extended Fund Facility (EFF) for Barbados. The completion of the review allows the authorities to draw about US$139 million.
  • Program implementation is strong, with all performance criteria for end-March met.
  • The economy faces a major challenge owing to the global coronavirus pandemic. Access under the extended arrangement has been augmented by about US$91 million (70 percent of Barbados’ quota in the IMF) to help accommodate the shock.
  • Since May 2018, international reserves have increased from a low of US$220 million to more than US$850 million at end-April 2020.

(Source: IMF)

Brazil's central bank could cut rates below target Published: 04 June 2020

  • Brazil's central bank could lower the benchmark Selic interest rate below a previously expected floor of 2.25% to help lessen the impact of the coronavirus pandemic on the economy, a bank official said on Wednesday.
  • At its last meeting in May, the central banks' monetary policy committee, or Copom, cut the Selic by 75 basis points to a record low of 3% in May and suggested it could lower it by the same amount in June and hold it there through the end of the year.
  • A pressing concern, according to Kanczuk, is Brazil's mounting public debt, which could rise to more than 90% of GDP before starting to decline in the future. Brazil's national debt reached a record high of 79.7% of GDP in April, according to figures released by the central bank in late May.

(Source: Latinfinance)

Bank of Canada holds rate at 0.25 Published: 04 June 2020

  • The Bank of Canada held its key overnight interest rate steady as expected on Wednesday and said that data shows the impact of the COVID-19 pandemic on the global economy appears to have peaked, though uncertainty remains.
  • The central bank held its rate at 0.25% in a decision made on the same day new governor Tiff Macklem took helm.

(Source: Reuters)

European Central Bank takes its pandemic bond buying to 1.35 trillion euros to try to prop up economy Published: 04 June 2020

  • The European Central Bank (ECB) announced Thursday that it will increase its Pandemic Emergency Purchase Programme (PEPP) by 600 billion euros ($672 billion), as it attempts to bolster the region’s economy following the coronavirus crisis.
  • The amount comes on top of 750 billion euros of government bond purchases that the ECB announced in March, taking the total to 1.35 trillion euros. The central bank also said Thursday that the duration of its crisis bond-buying program would be extended from the end of 2020 until June 2021, or until the bank believes the crisis is over.

(Source: CNBC)

Sharp Contraction In Exports Will Produce Deep Recession In Jamaica Published: 03 June 2020

  • According to Fitch, the Jamaican economy will contract by 5.1% y-o-y in 2020, from -2.6% previously, as the Covid-19 pandemic halts tourism activity and exacerbates the contraction in bauxite production.
  • A 5.1% contraction would be deeper than Jamaica’s 4.3% contraction in 2009 during the global financial crisis and would be its largest recession since 1980. In particular, Fitch expect sizeable declines in the tourism and mining industries, which accounted for 9.2% and 3.4%, respectively, of GDP in 2018.
  • The coronavirus pandemic will exacerbate the contraction in Jamaican goods exports. Bauxite, which accounted for 62.7% of goods exports in 2019, is mined for its high aluminum content. However, both price and volume effects will undermine Jamaica’s mining sector.
  • At the same time, the sustained spread of Covid-19 in key source markets will lead to a steep decline in Jamaican tourism activity and service exports. The coronavirus pandemic has led to extended lockdowns and steep contractions in the US and UK, which accounted for 68.6% and 11.9% of total arrivals to Jamaica in 2019, respectively.
  • An estimated 160,000 workers in the tourism industry, equivalent to 11.7% of Jamaica’s total labour force, have been laid off since March. Fitch expect unemployment to average 13.0% in 2020, up from 7.3% in January 2020.

(Source: Fitch)

Key Insurance Sinks Deeper Into Losses Published: 03 June 2020

  • Key Insurance Company Limited reported unaudited net loss of $338.62Mn (EPS: -$0.919) for the three months ended March 31, 2020, representing a 789.9% (or $300.57Mn) increase relative to the$38.05Mn loss made in the prior year.
  • The main contributors to this performance was a 410.8% (or $221.99Mn) increase in claim expense, an 11.4% (or $11.22Mn) increase in administration and other expense as well as a reported $323.14Mn in amortization of underwriting assets. In addition, the company recorded a 73.3% (or $34.95Mn) reduction in commission on reinsurance ceded and a 73.7% (or $8.67Mn) decrease in investment income.
  • The stock has risen 49.7% since the start of the calendar year. Key Insurance closed Tuesday’s trading session at $4.79 and currently trades at a P/B of 5.73x which is above the Main Market Financial Sector Average of 1.76x.

(Source: Key Insurance Financials)

IMF Executive Board Approves a US$ 250 Million Disbursement to The Bahamas to Address the COVID-19 Pandemic Published: 03 June 2020

  • The IMF Executive Board approved The Bahamas’s request for emergency financial assistance of about US$250 million to help meet the urgent balance-of-payments needs stemming from the COVID-19 pandemic.
  • The COVID-19 pandemic comes on the heels of the widespread destruction caused by Hurricane Dorian in September 2019. Coupled with domestic containment measures, the collapse in tourism will cause a deep recession.
  • The Bahamian authorities have taken timely and targeted measures to boost health spending and mitigate the socio-economic impact of the pandemic, supporting jobs and vulnerable segments of the population.

(Source: IMF)

LatAm toll roads feel cash flow pinch Published: 03 June 2020

  • Several toll road concessionaires in Latin America have suffered a sharp decline in revenues as a result of travel and trade restrictions during the coronavirus pandemic, but they may receive help from governments before the end of the year.
  • In Colombia, where tolls for freight vehicles were waived until May 31 to guarantee the continued supply of goods, the government is expected to reimburse toll road operators for lost revenues in July, but it is not expected to provide additional compensation for the decline in revenues beyond the availability payments already outlined in the concession contracts.
  • In the meantime, concessionaires face downgrades as the drop in revenues forces them to dip into their cash reserves. Fitch Ratings downgraded Ruta al Mar to BB+ from BBB- and put a negative outlook on the BBB- rating for Pacífico 3 in April.
  • Fitch expects traffic to return to 2019's levels in 2021 in most countries in Latin America but not before 2023 in Mexico. As a result, the rating agency downgraded Concesionaria Mexiquense to BBB from BBB+ and put a negative outlook on Red de Carreteras de Occidente (RCO). In Panama, it cut ENA Este to BB- from BB and ENA Norte Trust to BB+ from BBB-.

(Source: Latinfinance)