Jamaica Confirms PetroCaribe Debt Sale Talks

5:00 PM December 10 – Jamaica market indexes rose and Jamaican dollar dropped to a new low. Jamaican finance minister confirmed talks with international institutions interested in purchasing PetroCaribe debt.

Jamaican market indexes traded higher as the dollar dropped to a new low in thin trading.

Finance and Planning Minister Dr Peter Phillips at a Parliamentary meeting in Kingston that Jamaica has been approached by financial institutions to acquire country’s PetroCaribe debt of $3 billion.

Phillips refrained from sharing more details but sources in Caribbean region confirmed that Dominican Republic may have entered in a verbal agreement to sell its debt to PetroCaribe to a group of investors through Goldman Sachs.

In a complex transaction, Venezuela provides cash to debtor nation to transfer its debt a deep discount to a new group of lenders with extended terms.

Historic low interest rates in the dollar and euro based securities, and the willingness of several investors in New York, Europe and China to assume Venezuelan risk, creates market for nearly $22 billion of PetroCaribe debt.

In these deals, there are very few winners other than the brokers arranging these deals.

Investment bankers typically charge between 5% and 10% fees, and the debtor nation like Jamaica is paid an incentive fee or reduced debt burden to transfer the payment to another group of lenders and Venezuela shares the bulk of the lost future revenues in exchange for no less than 10% of total debt payment received in cash up front.

In Jamaica trading, The JSE Market Index soared 980.87 or 1.3% to 76,024.35 and The JSE Select Index gained 40.84 or 1.9% to 2,239.58.

Trinidad Composite Index rose 0.02 to 1,144.80. Bahamas Stock Exchange Index climbed 6.83 or 0.4% to 1,641.08.

Of the 19 stocks traded on Jamaica Stock Exchange, 10 increased, 5 decreased and 4 were unchanged.

Jamaican dollar traded near record low and average buy rate against the U.S. dollar was 113.39 and average sell rate was 114.03 according to the website of Bank of Jamaica.

In Kingston trading today, 3.29 million units changed hands worth J$34.08 million and LIME led the most active list with 1.30 million units followed by Scotia Group Jamaica with 977,666 units.

LIME rose 2 cents to J$18.50 and traded 1,302,045 and Scotia Group Jamaica jumped J$1 to J$21.14 and traded 977,666. Jamaica Broilers Ltd. advanced 4 cents to J$4.06 and traded 228,433.

Sagicor Real Estate X Fund Limited tumbled 24 cents to J$7.01 and traded 137,095 and Carreras Limited plunged 84 cents to J$36.16 and traded 68,034 and Berger Paints Ltd. dropped 10 cents to J$1.50 and traded 30,350.

Trinidad Market Overview

Trinidad Composite Index rose 0.02 to 1,144.80 and of the 13 stocks traded 2 advanced, 2 declined and 9 closed unchanged.

Sagicor Financial Corporation led the most active list and gained 5 cents to TT$6 and traded 56,133 followed by Scotiabank Trinidad & Tobago Limited added 3 cents to TT$59.43 and traded 40,908.

Jamaica Money Market Brokers Limited fell 1 cent to 44 cents and traded 470,000 and National Flour Mills Limited decreased 2 cents to TT$1.10 and traded 2,129.

World Market Review

Stocks in New York and in Europe extended two-day losses after crude oil deepened losses on a weak outlook from the OPEC.

The 12-member organization estimated world demand for its oil to drop to a 12-year low in 2015.

Stocks in New York extended two-day losses after crude oil deepened decline to more than 45% and European markets closed lower on the ongoing political turmoil in Greece.

Crude oil extended two-day losses to more than 7% and prices fell to a new five-year low putting pressure on the price of gold, copper and sugar.

The latest decline in oil price was driven a drumbeat of new forecast of oil price dropping as low as $40 after the OPEC estimated lowest export to world market in 12 years.

In the U.S. corporate news, Belden agreed to acquire Portland-based privately-held Tripwire for $710 million. Costco net soared 17% on 7% increase in revenues. Comverse net tumbled 96%.

Belden Inc (BDC) surged 8.3% or $6.24 to $81.16 after the networking service provider agreed to acquire Portland-based privately-held cyber security software developer Tripwire, Inc. for $710 million in cash from Thoma Bravo, LLC.

The deal is expected to close in the first-quarter of 2015.

Costco Wholesale Corporation (COST), the discount store operator reported net sales in the first-quarter ending on November 23 climbed 7% to $26.28 billion from a year ago period. Comparable store sales in the quarter jumped 5%.

Net income in the quarter soared 16.7% to $496 million or $1.12 a diluted share compared to a same quarter last year.

Toll Brothers Inc (TOL), the homebuilder reported revenues in the fourth-quarter ending in October jumped 29% to $1.35 billion from a year ago period.

Net income in the quarter surged 38.6% to $131.5 million or 71 cents a diluted share from a same quarter last year.

The company said average price of homes delivered climbed 6.2% to $747,000 compared to $732,000 in fiscal third-quarter and $703,000 in the same quarter a year ago.

In London trading, FTSE 100 index slid 0.29 to 6,529.76 and in Frankfurt the DAX index gained 0.6% or 54.59 to 9,848.30.

In Paris, CAC 40 index rose 0.1% or 4.26 to 4,268.20.

In European corporate news, Ashtead Group profit surged 27% to £166 million on 23% increase in revenues. BG Group agreed to sell pipeline network of Queensland to APA Group for about £3.2 billion.

Serco won five-year contract worth £1 billion in Australia. Tui AG net swung to profit to €105 million.

Ashtead Group Plc surged 8.7% to 1,171 pence after the U.K.-based industrial equipment provider reported revenues in the first-half ending in October soared 23% to £987.3 million from £849.7 million a year ago period.

Net profit in the period surged 26.7% from a year ago to £165.6 million from £130.7 million and diluted earnings per share jumped to 32.8 pence from 25.9 pence.

BG Group Plc slipped 1.1% to 888.90 pence after the U.K.-based oil and natural gas explorer agreed to sell 543 kilo meters in large-diameter underground pipeline network in southern Queensland of Australia to APA Group for about £3.2 billion or $5 billion.

The company plans to use part of the net proceeds to reduce net debt and fund future investment.

The transaction is expected to close in the first-half of 2015.

Tui AG fell 0.6% to €13.52 is a Germany-based travel group said revenues in the year ending in September increased 1.2% to €18.71 billion from €18.48 billion a year ago period.

Net in the year swung to profit from a year ago to €104.7 million compared to a loss of €11.1 million and diluted earnings per share swung to €0.31 from a loss of €0.14.

The travel and tour group is targeting core profit of €1 billion after merge with TUI Travel and the deal is expected to complete onDecember 17.

The company said it will announce new name of the group next week.

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