In our June 2018 Corporate Surveillance report, we highlighted the refinancing risk that Trinidad’s oil refinery, Petrotrin, faces on its 2019 global bonds. The company has a bullet payment totalling US$850Mn on these bonds, which falls due on August 14, 2019, and has discussed potential refinancing proposals with international investment banks. In light of the company's weak fundamentals and the rising interest rate environment, it is likely that the refinery will face high borrowing costs from creditors if it is to successfully refinance these bonds. The risk is further elevated by the fact that the government’s recent statements imply that it will not be providing a guarantee on Petrotrin’s debt. Evidence that the government is determined to have Petrotrin operate independently was given when the country’s Energy Minister Franklin Khan recently stated, at the opening ceremony of the 2018 Energy Resources Conference and Exhibition, that the state would not provide capital to Petrotrin and that it would have to rely on the private sector for capital injection.

The Bank of Jamaica (BOJ) on Wednesday June 27, 2018 announced its decision to lower its policy rate (the interest rate offered on overnight placements with Bank of Jamaica) by 50 basis points (bps) to 2%, effective June 28, 2018.

This increase in monetary policy accommodation reflects i) its assessment that inflation over the June 2018 to December 2018 quarters is likely to remain below the target of 4% to 6% and ii) the risk of projected inflation for first quarter 2019 not meeting previous expectations.  The measures were therefore aimed at fostering greater credit expansion and a faster pace of GDP growth which will support inflation returning to the target of 4% to 6%.  

This marks the third time the benchmark rates are being reduced since the start of the year.   The central bank previously cut rates by 25bps (to 2.75%) in February and more recently rates were slashed by another 25bps (to 2.50%) in May.

This downward trajectory in the BOJ policy rates reflects a key difference in policy direction between the BOJ and US Central Bank (The Federal Reserve or “The Fed”) which effected two policy rate hikes since the start of the year (25bps to 1.75% in March and 25bps to 2% in June).   This came on the back of more favourable outturn in key economic indicators such as GDP, unemployment and consumer spending and inflation.    In light of these stronger fundamentals and Trump’s stimulus package, consensus expectations are for inflation to trend upwards, above the target rate of 2%, thereby prompting further rate hikes.

With BOJ and Fed policy rates now equal at 2% and the likelihood of further divergence, there will no doubt be implications for the JMD to USD exchange rate.  With no differential between Fed and BOJ benchmark rates, we anticipate that investors will have a greater appetite for USD denominated assets going forward.   

Caribbean Flavours and Fragrances Limited (CFF) has advised of the Tax Administration Jamaica approval of CFF’s request to change their Company’s Accounting Terminal Date from June 30 to December 31, effective June 30, 2018, pursuant to Section 6 of the Income Tax Act.

The Company’s returns will be filed as follows:

Source: JSE

Kingston Properties Limited (KPREIT) has advised that under KPREIT’s share buyback programme, the Company purchased 5,000 KPREIT shares on June 19, 2018.

Source: JSE

Jamaica Stock Exchange (JSE) has advised that Mr. Ian McNaughton and Mr. Gary Peart have been re-elected Chairman and Deputy Chairman, respectively, of the Board of the Jamaica Stock Exchange, at a meeting of the Board of Directors of the Company held on June 21, 2018.

Source: JSE

Productive Business Solutions Limited (PBS) has advised that PBS wishes  to hold a meeting to declare a dividend payable to the Cumulative Preference Shareholders on June 29, 2018.

Source: JSE

GWEST Corporation Limited (GWEST) has advised that Miss Camille Adrians resigned from the position of Chief Accountant effective June 2018, to pursue personal interests external to the Company.

GWEST further advised that Miss Karen Christie-Harris has been appointed to the position of Chief Accountant effective June 2018.

Source: JSE

The revenue of the Jamaica Stock Exchange increased by 14% in 2017 over 2016. This was the highlight of the report given by JSE’s Managing Director, Mrs. Marlene Street Forrest at the JSE’s 41st Annual General Meeting (AGM) held on Thursday, June 21, 2018, at the JSE, 40 Harbour Street. She made this and other observations regarding the improvement in growth and profitability of the JSE Group over the last five years, to a room filled with dedicated shareholders and directors of the Exchange.

Source: JSE

Everything Fresh Limited (EFRESH) is the second company to list ordinary shares on the JSE Junior Market in 2018, increasing the total listed companies in that market to 36. Including EFRESH, the number of securities listed on the Junior Market will increase to 41. The total number of companies listed on the JSE will increase to 73 and the total number of securities listed will increase to 106. Including the $390 million raised by EFRESH, a total of $15.2 billion has been raised in 2018 on the Markets of the JSE.

Source: JSE

FosRich Company Limited (FOSRICH) has advised that a director purchased 1,086,325 FOSRICH shares on June 14, 2018.