NCB Financial Group raises $15-billion bond

DESPITE having no difficulty raising capital from the market in the past, NCB Financial Group’s (NCBFG) most recent bond offer was no easy affair based on prevailing events leading to the open and closing off the bond which took in JM$15 billion.

The Jamaica-based conglomerate faced strong headwinds as general market uncertainty was compounded by the implementation of three-day lockdowns that forced the bond offer to be extended by a week to September 9. NCBFG has various corporate notes and debt maturing over the next two years valued at JM$74.86 billion as per its 2020 audited financials. The latest bond issue was used to refinance part of the US$140.48-million USD-indexed bond which matured at the end of August.

“If we were to sum up the feat that we would have achieved in one word it would be “extraordinary”, and this is because we entered this transaction knowing that there were significant headwinds which, in normal times, would be very problematic to overcome. These included a high concentration of NCBFG-related exposure already in the market — both from a debt and equity perspective — lack of market liquidity and the institution of ‘no-movement’ days,” stated Herbert Hall, vice-president of investment banking for Jamaica and the northern Caribbean at NCB Capital Markets.

Herbert Hall, vice-president of investment banking — Jamaica and the Northern Caribbean, NCB Capital Markets (Photo: YouTube

Pension funds and other institutional investors are somewhat limited in their exposure to a specific asset class and investment based on regulations and internal risk controls. This was compounded by the fact that more investors chose to be conservative amid the changing COVID-19 measures. NCBFG’s stock price is down 11 per cent this year.

However, NCBCM utilised other parts of NCBFG to mobilise capital with the reduced working week. This included using Guardian Life and NCB Insurance Agency and Fund Managers to refer new clients and facilitate the logistics of getting documentation processed. There was also the use of the treasury management team to create liquidity for clients and the use of NCBCM’s alternative investment platform to cater to investors who would want shorter durations. NCB also utilised numerous selling agents for the offer.

Guardian Life Centre in New Kingston, Jamaica (File photo)

Although NCBFG could have upsized the bond offer to JM$22 billion, it decided to close the offer at the original amount. When questioned by Jamaica Observer‘s Sunday Finance about this development, Hall responded, “NCBFG decided to cut off once we hit the $15-billion mark as there were some other time-sensitive activities that the group wanted to accommodate. Notwithstanding this, raising $15-billion from over 1,000 investors in this type of market is exceptional and speaks volumes to the confidence reposed in NCBFG.”

With the bond now closed, NCBFG will be looking to list the bond on the Jamaica Stock Exchange. It’s unknown if it will be listed on the bond market or private market to facilitate ease of trading.

Despite all of the events, Hall remains proud of the work his team was able to execute under the circumstances. He is currently looking forward to more companies using the capital markets to transform their operation in the current environment. NCBCM has executed 77 transactions valued at $331 billion between March 2019 and June 2021 for businesses across Jamaica and the region.

“While there is still a lot of uncertainty and fear about the current pandemic, we remain cautiously optimistic about our capital markets and, by extension, Jamaica. Our view is that while it will take a little time to get back to pre-pandemic levels, we will continue to see our Jamaican companies and value-seeking investors making investments and taking advantage of the opportunities borne out of the current climate,” Hall said.

— David Rose