Update: NCB taps bond market for over $50b for debt refinancing

Jamaica’s largest banking and financial conglomerate NCB Financial Group Limited has offered more than $53 billion worth of bonds to the market since March to refinance existing debt.

One of the bonds currently on the market seeks to raise $6 billion. The offer opened on April 15 and closes May 6, with NCB Capital Markets Limited acting as lead broker.

Separately, NCB Financial raised US$26.6 million ($41.5 billion) from unsecured bonds offered to wealthy investors in March at 7.75 per cent and are set to mature in two years; and raised up to $6 billion from a secured bond that also closed in March, in tranches priced at 11 per cent and 11.5 per cent. The bonds will replace old debt as a form of refinancing.

NCB Financial holds around $590 billion in debt, which is around three times its $196 billion of capital. The banking conglomerate’s debt levels have risen since the pandemic from two times its capital.

NCB Financial Group, led by Chairman Michael Lee-Chin and CEO Robert Almeida, last year reinstituted the payment of dividends, which had been in abeyance since the pandemic to safeguard capital. The banking group began making distributions again after changing the executive leadership. The last distribution was in March at 50 cents per share, totalling $1.27 billion.

Outside of its current foray in the debt market, NCB Financial is also seeking additional equity capital via the stock market. The APO, or additional public offering of new shares, would grow its share capital. The prospectus published after market close on Thursday indicates that NCB wants to raise between $5.1 billion and $7.65 billion. The offer will be on the market from May 6 to 27.

The current bond for up to $6 billion is split into three tranches and will mature in two, three and five years. The first tranche aims to raise $2.5 billion at 11.25 per cent until maturity in 2026, the second is targeting $2 billion at 11.75 per cent up to 2027, and the third is aiming for $1 billion at 12.5 per cent. It matures in 2029.

The coupons are twice the current level of inflation, which fell to 5.6 per cent in March.

NCB Capital will register the bond with the Financial Services Commission as an exempt distribution, which will confine the offer to high net worth investors and institutions. NCB Financial does not intend to list the securities on the Jamaica Stock Exchange, which operates a private market for the secondary trading of debt securities.

steven.jackson@gleanerjm.com

UPDATE: This story has been updated with new information on NCB Financial Group's new share offer scheduled for next month.