BOJ allocates J$37 billion in CD auction at 6.44% average yield

Bank of Jamaica allocated J$37 billion of fixed-rate certificates of deposit in its October 14 competitive price auction, after receiving bids totalling J$45.742594 billion. The successful allotments are due to be issued and settled on October 16, 2026.

The result moves the operation beyond the offer announced on October 12. BOJ received 292 bids and reported 241 successful bids, allocating the full amount it had offered. The successful bids produced an average yield of 6.44% and an average price of J$99.96.

The auction yield and the security’s coupon describe different parts of the transaction. The coupon remains fixed at 6.25% per annum, while the return represented by the yield depends on the purchase price as well as the promised payments. Competitive bidding determines the issue price; it does not rewrite the fixed coupon.

The instrument is labelled BOJ 6.25% FR 30D-CD 20261016, but the contractual tenor is 28 days, running from October 16 settlement to November 13 maturity. The annual coupon should therefore not be read as a return for the entire short holding period. Interest is payable at maturity and is subject to withholding taxes.

The lowest submitted bid rate was 5.45%, for J$4,345,000, and the highest was 9.00%, for J$250,000,000. These show the range submitted to BOJ, rather than the range necessarily accepted in full.

The bank reported the highest rate receiving full allocation as 6.9851%, with an associated amount of J$50,000,000. The partial-allocation rate was 6.989%; the allocation percentage at that rate was 17.60%. Bidders at that boundary therefore received only part of their requested amount.

The term sheet reserved J$35.15 billion for competitive bids and J$1.85 billion for non-competitive bids. Public-sector entities were required to bid non-competitively, while other entities had to use the competitive channel. Non-competitive allotments take the weighted average price of successful competitive bids, linking their pricing to the successful auction orders.

The terms also allowed allocation to be subject to a reserve yield, with bids above that reserve price yield ineligible. Participation was direct for Primary Dealers and commercial banks; other investors had to go through a Primary Dealer. These designated securities dealers provide an access channel to the operation.

Applications were scheduled through JamClear-CSD between 9:30am and 10:45am on October 14, with a minimum application of J$100,000. JamClear-CSD is the sole legal registrar for the securities, keeping their formal ownership record.

Cash settlement on October 16 takes place through accounts in JamClear-RTGS, the real-time payment system at BOJ. The same account arrangements apply to principal and interest payments. Securities registration and the transfer of money are separate functions within that timetable.

BOJ said the total nominal amount outstanding for its 30-day CDs on October 16 would be J$120 billion. That broader outstanding balance should not be confused with the J$37 billion allocated in this auction. The next auction is scheduled for Wednesday, October 21.