UWI Mona bond snapped up by eager market
Published:Friday | January 10, 2025 | 12:07 AMNeville Graham - Business Reporter
Pension funds and other institutional investors snapped up a long-term bond placed on the Jamaican market by the University of the West Indies, Mona, to raise $3 billion.
UWI Mona Principal, Professor Densil Williams, said the private placement of the 15-year bond arranged by Sygnus Capital occurred in mid-December.
“They went into the market, the market gobbled it up in about 24 hours, and that was it,” said Williams, describing the intensity of the demand.
“They tested the market. They said, wow, the market responded so positively. So, they said, you know, let’s just close off,” Williams told the Financial Gleaner after the launch of the UWI Mona Liability Management Programme, a partnership with Sygnus Capital aimed at better managing the institution’s debt stock.
The programme spreads the word that the university is moving to deal with its stock of debt, Williams noted.
“We have some high-cost debt on our balance sheet; and debt also denominated in US dollars. We looked at it and we recognised that we earned Jamaican dollars, (but) we have to convert to US dollars to pay out. The interest rates and so on are so high,” said the UWI Mona principal.
“As a result of that, what we did was to get our financial partner on board, which is Sygnus Capital. We structured a Jamaican-dollar bond and used that bond to take out the US-dollar high-cost debt at high interest rate,” Williams said.
He declined to provide further specifics about the transaction, but said the new bond was priced at single-digit interest rate and denominated in Jamaican dollars. It would reduce UWI Mona’s interest costs by about $120 million, he added.
The UWI Mona principal said the savings will be reinvested in a number of other revenue-generating initiatives on the campus.
The list of initiatives includes UWISTAR, which is going to bring the short courses to market; and the global health agenda, under which a school of global health is to be built at the UWI Western Jamaica campus.
“We’re also looking at building out a company, which we call a knowledge process outsource company. That company is going to now employ students, so that they can use their skills to sell to the world through the knowledge processing sector,” Williams said.
UWI Mona also plans to invest more in its student work programme, with about $120 million earmarked from operational expenditure going towards the employment of students across the campus for this academic year.
Additionally, now that UWI Mona has more fiscal space, Williams said more money will be spent on student activities.
With the savings on debt servicing, the leadership was faced with a choice between playing it safe and earning more, said the university principal. They chose the latter.
“If you don’t spend today, you can’t earn the revenue tomorrow. The question you have to ask yourself is, ‘Should we just put these funds in an account and earn interest on it, or should we invest in things that are going to earn us revenue?’ And the call is: invest in things that are going to give you greater revenue generation in the long run,” Williams said.