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New York rating agency upbeat about JA
The New York-based rating firm Bear Stearns has issued another upbeat report on Jamaica.
In the report issued on Wednesday, Bear Stearns said Jamaica's fiscal results for April and May were in line with expectations and on track to meet the government's target of a balanced budget for this fiscal year.
According to Bear Stearns, the country's tax revenues would increase in the coming months as the new tax measures take effect.
It said significantly lower interest payments as well as wage restraints allowed the government to increase spending on programmes and capital projects.
*** Courtesy of RJR NEWS
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Caribbean bonds performing well - Bear Stearns
Observer Business Reporter
Friday, July 22, 2005
United States Investment House Bear Stearns has given a favourable assessment of the recent performance of Caribbean bonds. Below is a commentary and analysis of their performance.
The BSCAX index of Caribbean and Central American sovereigns generated a total return of 1.84% for the month of June, which followed a 2.5% return in May and a 2.0% return in April. This brings the 1H05 total return for the index to 8.35% (not annualized). This is a significantly stronger performance than we expected at the beginning of the year, and compares favorably to the first-half return of the broader emerging market indexes of just over 5%. The strongest performers for the year-to-date have been the high yielders of the Dominican Republic (16.7%) and Jamaica (10.2%), but the Bahamas, Costa Rica, Panama, Guatemala, El Salvador and Barbados have all generated returns for the first half of 6% or greater.
Country: Jamaica Recommendation: B1/B Comment: Outperform Last month: Outperform
Jamaica slightly outperformed the BSCAX in June, returning 2.01% against 1.84% for the BSCAX. Based on a recent research trip to Jamaica, as well as the data flow, we remain relatively optimistic on the credit outlook. Second quarter consumer and business confidence surveys indicate a slight fall in confidence from 1Q05, but it remains high. We would attribute the slight drop in confidence to the fact that the first quarter is the most economically active in Jamaica, and that in the second quarter new tax increases came into effect. The fiscal accounts for the first two months of the fiscal year are on track to meet the balanced budget target, with revenues running slightly ahead of target and expenditures running below target. We believe that it is too early to make a call on the FY2005-06 budget target, which the IMF describes as having "landmark" importance in reducing the debt-burden indicators and improving the credit ratings. With the key macro and policy variables moving in the right direction, we believe that the biggest risk to the near-term outlook is the hurricane season, which is already off to a disturbing start. Hurricane Ivan, in September 2005, negatively impacted several variables in Jamaica, including inflation, economic growth, the trade accounts and the budget. We believe that Jamaican bond yields have hurricane risk already priced in. Jamaica currently trades at higher yields than other single-B and "3-B" sovereigns such as Argentina (NR/B-), Brazil (B1/BB-), DomRep (B3/B), Indonesia (B2/B+), Philippines (B1/BB-), Turkey (B1/BB-), Uruguay (B3/B) and Venezuela (B2/B).
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