On Wednesday, the Fed announced an increase in its benchmark interest rate by a quarter point to a target range between 2.25 to 2.5 percent, in a widely anticipated move. World equity markets slumped on Thursday after the U.S. Federal Reserve raised rates even as signs grow that global economic growth is slowing. Jitters over the Fed's move to largely keep guidance for additional hikes over the next two years spread from Asia to Europe. Major indexes fell to their lowest in two years and investors headed for the relative safety of government debt.

 (Source: CNBC)

Fitch expects that the fiscal deficit will widen to 4.0% of GDP in 2018 and 5.1% in 2019 on account of lower revenues as real GDP growth decelerates, and higher government outlays partly due to rising debt-servicing costs. A continued rise in debt levels over the coming years would put upside pressure of financing costs. However, the direct effect of higher interest rates on the budget will be limited in 2019. There is a growing possibility of a partial US government shutdown in December, but it is unlikely to alter our 2019 fiscal outlook materially.   

(Source: Fitch)

Fosrich Company Limited (FOSRICH) has issued 2 series of Notes during the week including a 6.75% Asset Backed Notes due 2020, valued at up to J$460Mn in the aggregate and a 9.50% Unsecured Notes due 2020, valued at up to J$200 million. FOSRICH further advised that this new facility replaces the existing J$460 million Mayberry facility and will be used to support the financing required for their new projects. These new projects include the completion of its Manufacturing segment which is expected to come on stream by late January. The new manufacturing business is expected to supply both the domestic and export markets. 

(Source: JSE)

CARICOM headquarters country, Guyana, thinks it is being short-changed in its relations with the United States Company, ExxonMobil. It is concerned over the terms of the Production Sharing Agreement (PSA) signed with the international major in 2016 relating to royalties and profits from the Stabroek block, which it now believes were over-generous.

(Source: Trinidad Express)

Barbados’s rapid implementation of an IMF backed fiscal adjustment programme will support capital inflows over the near-term, relieving pressure on its external accounts. However, Fitch believes the unresolved renegotiation of its external debt will continue to undermine business operations and investment over the coming quarters. An extended or acrimonious renegotiation poses downside risks to medium-term economic forecasts.

(Source: Fitch)

• Fitch expects the Belizean government led by Prime Minister Dean Barrow will face declining public support over the coming quarters due to elevated crime and weak economic activity. 

• Weak public support will undermine the administration’s efforts to reduce its substantial debt load over the coming years. 

• Belize earns a score of 64.0 out of 100 on our Short-Term Political Risk Index, ranking 20th out of 26 Caribbean economies and reflecting our assessment of weak social stability and a challenging policymaking environment.

 (Source: Fitch)

• On Wednesday Digicel said investors holding 94.7% of its 2020 bonds had agreed to a plan to exchange the bonds for debt maturing in 2022. A further offer to postpone the repayment of  the $1Bn bond due in 2022 by two years remains on the table, with a deadline falling on Friday for investors to accept the terms. 

• Mr O’Brien’s push to restructure these bonds prompted credit rating agencies Moody’s and Fitch to downgrade Digicel, which has debts of $6.7bn. A committee of bondholders had dismissed his original plan as “unacceptable”. But he sweetened the terms this month, improving the standing of $580m of the 2020 bonds by exchanging them for new senior secured bonds. 

• The interest rate will remain the same at 8.25 per cent. The plan to postpone the 2022 debt would increase the interest rate to 9.125 per cent from 7.125 per cent.

 (Source: The Financial Times)

• Access Financial Services Limited (AFS) has announced that it has completed the acquisition of 100% of the outstanding shares of Embassy Loans Inc., a Florida based auto equity finance company, at a cost of US$6.4M. 

• The transaction which was completed on December 14, 2018 was funded from the proceeds of a J$900M global bond which was issued in October 2018. 

• The acquisition of Embassy is in keeping with AFS’s long-term strategy to diversify the Company’s operations and revenue streams into markets where profitable opportunities for growth are identified and it provides a platform for expansion in North America.

(Source: JSE)

• Fitch forecasts that the Jamaican dollar will depreciate over the coming months, as inflation picks up and the current account deficit widens. Over the long term, they expect the pace of depreciation to slow relative to the past decade as more orthodox economic and monetary policies support the currency. 

• Additionally, Fitch expects real interest rates in Jamaica will remain well below those in the US over the coming quarters, placing downside pressure on the Jamaican Dollar. 

• While they expect the Bank of Jamaica to increase its benchmark policy rate by 75 basis points (bps) in 2019, they anticipate that it will maintain a relatively accommodative policy stance. Meanwhile the expectation is that the US Federal Reserve will raise interest rates in the US by an additional 75bps points in 2019 after raising rates by 75bps in 2018.

(Source: Fitch)

(Bloomberg) Billionaire Denis O’Brien’s telecoms company, Digicel Group Ltd., is edging toward an accord with some investors to push out a share of its debt after months of negotiations, according to a person familiar with the talks.

The company is offering new secured bonds maturing in 2022 in exchange for $2 billion of unsecured notes originally due in September 2020 and may announce at least a portion of its investors have taken up of the offer as soon as Tuesday, said the person who asked not to be named as the information is not yet public.

Digicel Sweetens Bond Exchange Offer Following Creditor Pushback

Bondholders balked at elements of an exchange plan outlined by Digicel in August and quickly organized to push for better terms. This month, Digicel extended the deadline for take up of the offer to December 18 and sweetened the terms. The company has been reviewing options to tackle debt used to turn the mobile-phone carrier into a global operation, with customers spread from El Salvador to Vanuatu.

If the offer is not completely taken up tomorrow, Digicel may offer a further deadline extension for the remaining investors, the person said. The company’s September 2020 bond yields 35 percent, up from about 21 percent in July.

Digicel is also negotiating a separate bond swap involving debt currently due in 2022. The deadline for bondholders to accept an offer in respect of those bonds remains at December 21. The company declined to comment.

Deal Tweaks

The debt exchange offer now prohibits payments to Denis O’Brien or any entity he controls in connection with it, according to a Covenant Review report. It also restricts the ability to transfer funds to equity until the 2022 credit agreement has been repaid in full, and sets conditions for asset sale proceeds to be used to repay the agreement. The revised debt exchange also restricts the ability of the company to incur new debt secured by the equity of Digicel, Covenant Review said.