Jamaica allots J$1.4 billion in oversubscribed government-bill auction

Jamaica allotted the full J$1.4 billion face amount offered in its October 7 government-bill auction, after applications for each of the two issues exceeded the J$700 million available.

The results were supplied by the Ministry of Finance and the Public Service’s Debt Management Branch and published on Bank of Jamaica’s website. Issue and settlement were scheduled for October 9, separately from the October 7 bidding date.

For issue JMG202600250, maturing on January 8, 2027, applications reached J$1,597,135,500. The amount allotted was J$700 million and the average yield was 5.46222%.

For issue JMG202600268, maturing on April 9, 2027, applications totalled J$1,367,355,100. It also allotted J$700 million, with an average yield of 5.97285%.

The two application amounts together were J$2,964,490,600. That is a measure of demand for the issues, rather than extra borrowing beyond the face amount actually allotted. Government bills are issued at a discount to face value, so the amount paid on purchase also differs from the amount due at maturity.

The January and April maturities define different repayment dates. Their separate average yields describe the results for those particular issues; they are not a single rate for all the bills sold.

The January issue’s bids receiving full allotment had quoted prices ranging from 98.67158 to 98.62912, corresponding to yields of 5.40000% to 5.57500%. The partial-allotment bid had a price of 98.62306 and yield of 5.60000%, with 55.00000% of the requested amount allotted.

The April issue’s full-allotment price range was 97.37800 to 96.97775, with yields between 5.40000% and 6.25000%. At the partial-allotment price of 96.95435 and yield of 6.29990%, the allocation percentage was 76.76833%.

These rows distinguish bids that received all they requested from the bid level receiving only a proportion. They also keep the average yield for an issue separate from the yield associated with a particular bid price. A lower purchase price increases the return available from repayment at face value, other terms being equal.

The published yields are rate measures rather than statements that investors receive those percentages in cash during the shorter holding period. Maturity, purchase price and the applicable calculation convention determine how the quoted rate relates to that period’s return.

The result gives total outstanding government bills of J$10,173,481,000 on the October 9 settlement date. This is the stock of bills outstanding, not the sum sold solely in the October 7 auction.

The next government-bill auction was scheduled for November 4, according to the published result.