Long term GOJ interest rates spike to 11% high

Investors garnered interest rates as high as 11 percent on long term bonds issued by the Government of Jamaica last week auctions of three long term bonds that were reopened and raised $10 billion. The average rates were more moderate, with the highest average being 8 percent.
The Government also offered $5 billion of the 10 percent bond due 2037 with a duration of 15.5 years. The auction attracted $6.759 billion that resulted in an average yield of 7.9614 percent. The lowest rate was 6.7 percent for $50 million and the highest success rate was 10 percent. The highest submitted bid was 12.999 percent. A total of 56 bids went after the bond, with 46 being successful.
The 5.675 percent bond due 2029, with a duration of 7.5 years, ended with an average yield of 6.3506 percent. The auction attracted $2.727 billion, of which $1 billion was allocated. The lowest rate was 5.575 percent for $100 million and the highest success rate was 6.94 percent. The highest submitted bid was 11 percent.  This instrument received 43 submissions, with only 18 being successful.
The 4.5 percent bond due 2025, with a duration of 3.5 years, delivered an average yield of 6.2329 percent. Bids from 51 applicants amounting to $4.779 billion chased the $4 billion on offer. Only 44 bids succeeded in getting allocated. The lowest rate was 4.5 percent for $44 million, with the highest success rate of 10.525 percent. The highest submitted bid was 11 percent covering $100 million.
The increased rates come against the background of recent moves by Jamaica’s central bank to hike rates and move towards an era of positive interest rates. Since making their intention known, the bank raised its overnight rate from 0.50 percent to 2 percent in September and November, while rates on 30 days CDs moved to 4.11 percent from 0.59 percent since the beginning of August and 2.15 percent at the September 22 Auction.