Seprod Limited has become the latest company to list its debt, in the form of a $1.7-billion bond, on the Jamaica Stock Exchange’s (JSE) Private Market
Seprod refinanced its JM$1.6 billion three-year bond with a coupon rate of 7.50 per cent for a new bond with a coupon rate of 6.75 per cent (50 basis points less) and a tenure of 10 years.
This refinancing will allow Seprod to save $5.25 million in interest expense each year. The JSE’s data on the bond shows it was listed on August 16. The original bond had matured on July 2 which was days after the company’s second quarter had concluded.
“Seprod has been manufacturing in Jamaica for over 80 years. Seprod’s ability to successfully issue a 10-year bond in this climate speaks to the confidence that investors place in the strength of the company’s brands, as well as the confidence that they place in the company’s ability to withstand the challenges facing manufacturers in Jamaica, such as the high cost of raw materials due to a devaluing dollar and the supply chain and other disruptions resulting from the pandemic,” stated Seprod Chief Financial Officer Damion Dodd in an e-mail to the Jamaica Observer.
Seprod has benefited from the increased consumption from consumers as seen with its revenue rising by seven per cent to JM$19.83 billion for the first six months of the year. This growth has been spearheaded by its manufacturing segment which generated JM$4.91 billion.
However, the company hasn’t been spared rising shipping costs, commodity increases and supply chain disruptions, which have pushed its cost of sales up by 19 per cent to $14.39 billion. This has left net profit down seven per cent at JM$1.21 billion.
When queried about the expectations of listing its bond, Dodd told the Caribbean Business Report, “Regarding the bonds being listed on the private market, this listing gives us further insight into how investors view our company and how willing they are to take up our debt issues. In the event that we wish to pursue further debt issues, we would have an indication of the potential take up by investors and how aggressively (particularly regarding coupon rate and term) we could structure the issue.”
Guardian Holdings Limited was the first company to list its debt on the private market with tranches B and D of its bond which totalled JM$7 billion. Colossal Holdings IC listed its cumulative redeemable preference shares in May which was valued at JM$2.01 billion. Pulse is the latest company which will be applying to the JSE Private Market as it looks to list its JM$1.1-billion seven-year bond.