South Jamaica Power completes US$162m funding overhaul

Loan, bond and guarantee

South Jamaica Power Company has completed a US$162 million refinancing arranged by Scotia Investments Jamaica, according to the Jamaica Observer. The transaction lowers the company’s weighted average financing cost, although the report does not disclose the new borrowing rates or quantify the savings.

The package combines a US$107 million eight-year loan, a US$20 million ten-year bond and a US$35 million standby letter of credit. The distinction between those instruments matters. Loans and bonds provide borrowed funds; the standby letter of credit supplies a contingent bank guarantee under its specified terms. Treating the whole package as new cash for construction would misstate its structure.

Scotia Investments served as sole lead arranger and bookrunner. Bank of Nova Scotia Jamaica underwrote the loan, which was syndicated before closing, distributing participation among lenders. The transaction account says demand reached 1.49 times the loan amount and 1.5 times the bond amount.

Oversubscription indicates that demand exceeded the financing sought. It does not mean the company borrowed more than the stated package, and it does not disclose the rates at which the final facilities were priced.

A major electricity asset

The refinancing supports the company operating the 194-megawatt natural-gas plant at Old Harbour Bay, St Catherine. It supplies electricity through a long-term power-purchase agreement with JPS and represents approximately a quarter of Jamaica’s net generation capacity, according to the report.

The plant entered service in December 2019 at a reported development cost of US$330 million, replacing heavy-oil generation. Its combined-cycle configuration uses heat from the gas turbines to help generate steam and additional electricity. That operating design is background to the financing transaction, rather than a newly announced capacity expansion.

A long-term sales agreement provides an established contractual setting for the plant’s revenue. The refinancing report, however, does not set out a change to electricity tariffs or a mechanism automatically transferring lower borrowing costs to consumers.

Refinancing and the credit assessment

CariCRIS’s May 15, 2026 assessment assigned a stable outlook, with regional foreign-currency and local-currency ratings of CariA- and CariA, and Jamaican national ratings of jmA+ and jmAA-. Regional and national grades belong to different rating scales and should not be treated as interchangeable labels.

The assessment identified the upcoming refinancing as a potential downgrade risk. Completing the transaction removes uncertainty about whether this particular financing package would close, but the company still has obligations to service and operating conditions to manage.

The report’s immediate finding is therefore a completed refinancing and a lower weighted average financing cost. The size of the saving, the new interest rates and any consequence for customer electricity prices remain unreported.