BOJ mops up excess liquidity

The Bank of Jamaica is introducing three variable rate instruments to commercial banks and brokers between today and Friday as part of measures to remove excess liquidity from the market.



The BOJ is offering a 180-day certificate of deposit with a limited offer of J$3 billion. It carries an initial coupon of 5.97 per cent and will be re-priced quarterly at 0.15 percentage points above the three month Treasury bill rate existing at the beginning of the next interest period.



Subscription for this instrument closes on Wednesday, April 17.



The BOJ is also offering a certificate of deposit that matures in 275 days, and another in 18 months. Both have unlimited subscription and will be available up to Friday, April 19.



The 275-day CD carries initial coupon of 6.02 per cent and re-prices quarterly at 0.20 percentage points above the three month Treasury bill rate existing at the start of each re-pricing period.



The 18 month CD carries initial coupon of 6.07 per cent and has a reset margin of 0.25 percentage points above the three month t-bill rate.



The regular 30-day CD is being offered at the existing rate of 5.75 per cent.



Last week, the BOJ introduced a special instrument, a one year fixed rate US-dollar indexed bond that had saw investors putting away J$8.8 billion, the largest raise by either the BOJ or the government of Jamaica since July 2010 for any single issue.



The BOJ said it "will continue to monitor the flow of Jamaica dollar liquidity in the financial system and adjust its money market operations to ensure continued stability in the financial markets.”



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marcella.scarlett@gleanerjm.com