Table of Contents
Key Points:
- NCB Financial Group Limited seeks to raise J$15 billion ($9.375 million) through a new bond offer with nearly double the previous interest rates.
- The bond offer is divided into three tranches with coupons of 11.5 percent, 12 percent, and 12.5 percent and tenors of two, three, and five years.
- The new bond offer follows an unsuccessful attempt to raise J$5 billion ($3.125 million)] through an additional public offering in June.
Michael Lee-Chin, a Jamaican-Canadian businessman who ranks as one of the world’s Black billionaires, leads NCB Financial Group Limited in seeking $9.3 million through a refinanced bond offer with nearly double the interest rates of three years ago. Opening on July 22 and closing on Aug. 29, the bond offer is led by NCB Capital Markets Limited, serving as the lead broker.
The security will not be listed on the Jamaica Stock Exchange, but bondholders can trade their bonds in blocks of $10,000 ($6.25) on the private market facilitated by the broker.
The bond is structured into three tranches, offering investors options based on their investment horizon and yield expectations. The tranches are priced with coupons of 11.5 percent, 12 percent, and 12.5 percent, and tenors of two, three, and five years, respectively.
Elevated interest rates and debt refinancing strategy
In 2021, NCB Financial raised J$15 billion ($9.375 million) at a six-percent interest rate. The current offer, set against a backdrop of elevated interest rates, aims for debt refinancing.
NCB Financial allows early repayment of the bond, in whole or in part, without penalty. Principal repayment will be made in full at maturity, and the term sheet includes covenants such as maintaining capital above 10 percent of assets and keeping subsidiaries solvent.
The bond is safeguarded with provisions for mandatory principal repayment and immediate due and payable accrued interest in case of default. The bonds will be registered as highly-rated debt securities with the Financial Services Commission, and JCSD Trustee Services Limited will act as the trustee.
Previous capital raising efforts and future financial stability
In June, NCB Financial attempted to raise J$5 billion ($3.125 million), with an option to upsize to J$7.5 billion ($4.687 million) through an additional public offering of new ordinary shares.
However, due to pricing concerns, the offer only raised J$2.5 billion ($1.562 million), marking the largest capital raise on the equities market this year.
With $152 billion ($95 million) in corporate bonds due by 2025 and having already raised $50 million earlier this year in bond offers, the new bond offer represents NCB Financial’s latest effort to strengthen its capital following the tepid response to its APO last month.
The company, which recently launched a relief initiative through its foundation, is the parent of National Commercial Bank Jamaica and has been a cornerstone of Jamaica’s financial landscape since 1837.
With assets totaling J$163.17 billion ($1.05 billion) and a strong market presence, NCBFG remains committed to advancing Jamaica’s social and economic development through strategic philanthropy and community engagement.
