Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says Jamaica’s private securities market grew by approximately 100 per cent between 2017 and 2020, with the value of bond issuance transactions doubling from some $200 million to $400 million.
He said that when compared to the banking sector, which recorded loan growth ranging between 16 and 35 per cent over the period, this indicates that “we are [undoubtedly] in a period of time where we are seeing an explosion of interest in private securities”.
This, the Minister added, “gives you [an idea] of the importance of the securities sector to the Jamaican economy”.
He was speaking during Monday’s (January 11) digital launch of the Jamaica Stock Exchange (JSE) private market, the entity’s newest offering.
Dr. Clarke said the reasons for the heightened interest in private securities are two-fold.
On one hand, he said, the Government’s appetite for borrowing has receded “as we have gotten our fiscal house in order and are pursuing our objectives in a very responsible, transparent and accountable way that assures debt sustainability for this and future generations”.
This, the Minister pointed, out has resulted in surplus funds becoming available for other activities.
“There was a time when the Government would have crowded out the private sector with its voracious appetite for borrowed credit from the local market. That being subdued, we are seeing [where] it has provided the opportunity for those funds to be channeled to the private sector through means such as private bond issues,” he said further.
Additionally, Dr. Clarke said there have been “deliberate” efforts by the Government through key stakeholders such as the Bank of Jamaica (BOJ) and Development Bank of Jamaica (DBJ), regulatory authorities like the Financial Services Commission (FSC) and now the JSE, to improve the ecosystem to facilitate increased access to funds.
“So [when] you put those two factors together… they account for the massive growth in the private bond market that we are seeing and that we will continue to see,” he added.
Against this background, Dr. Clarke said he was “very pleased” with the JSE’s display of “entrepreneurial energy and vision” to seize on the resulting opportunities and create the private market platform, pointing out that this was a “combined effort of many people”.
The Private Market will facilitate the listing of private bonds and equities securities on the NASDAQ Platform.
“It will build secondary market participation and offer opportunities for investors and corporates alike [by providing a] transparent mechanism for the pricing and trading of private market securities,” Dr. Clarke said.
In her remarks, JSE Managing Director, Marlene Street Forest, said the private listing and trading of securities on the new platform will be in accordance with the FSC’s guidelines for exempt distributions.
An exempt distribution allows companies to issue securities to raise money without the time and expense of filing a prospectus.
Dividends or capital gains derived from facilities or instruments such as mutual fund or company stock, must be paid or distributed to shareholders at least once a year.
“Consistent with this requirement, issuers of securities in the private market must first be registered with the FSC, in accordance with the FSC’s Guidelines for Exempt Distribution, for securities to be considered for listing on the JSE Private Market,” Mrs. Street Forest further informed.