Tue | Nov 24, 2020

GHL hunting $13b from Jamaican investors to shore up subsidiary

Published:Friday | September 25, 2020 | 12:12 AM

Regional insurance powerhouse Guardian Holdings Limited, GHL, aims to raise $13.4 billion in a corporate bond offer in Jamaica that closes today, Friday.

The company, based n Trinidad & Tobago but majority-owned by Jamaica’s top banking conglomerate, NCB Financial Group, plans to use the proceeds of the issue for “balance sheet support for a GHL subsidiary”.

The Financial Gleaner awaits a response from broker NCB Capital Markets on whether the issue being done in Jamaica is linked to the deal in which the operations of NCB Insurance are being combined with that of Guardian Life Limited.

NCB Financial took over GHL last year, when it doubled its stake in the insurance conglomerate to 62 per cent. Then earlier this year, NCB Financial announced plans to transfer the insurance and annuities business of NCB Insurance to Kingston-based Guardian Life Limited.

NCB Insurance will continue to operate as a pension fund administrator and investment manager but cease to write insurance. However, it will sell insurance products on behalf of Guardian Life.

NCB Financial did not disclose the specifics of the transaction, which was awaiting regulatory approval by the Financial Services Commission.

The GHL bond, for which NCB Capital Markets is acting as lead arranger and broker, has five tranches, each at a specific interest rate and fixed tenure. Tranche A is a $2-billion issue spanning two years at 5.75 per cent; tranche B spans five years at 6.5 per cent and aims to raise $4.2 billion; tranche C spans six years at 6.75 per cent and is targeting up to $2 billion; tranche D spans seven years at 7.0 per cent, with a fundraising target of $4.2 billion; and tranche E is a $1-billion issue spanning 10 years at 8.75 per cent.

The minimum subscription is $1 million.

Regional rating agency CariCRIS has assigned a CariAA and a jmAAA rating to the bond.

GHL does not plan to list on any exchange for trading. Four of the five tranches allow for early redemption. Trances B, C and D are callable in the last two years of their tenures; while the 10-year tranche, E, is callable in the last three years. The two-year tranche, A, is not callable.

GHL will incur a penalty of 2.0 per cent above the interest rate on the facility if it fails to pay interest on the bonds on time.