Debt profile & recent economic performance in perspective

[Don1]

Our peeps have diagnosed problems to point of nausea.

How we gwine wuk togaddah to fix dem and deliver prosperity in a reasonable timeframe???

social contrak mi seh.... IMF an World Bank sintin nah dweet...at least nat by itself... JLPNP powa muss get reduce....UNLESS wi get one Norman Manley inna powa... which is VERY remote

[Karl]

You just realise this? Now you see how FINSAC at 50% interest rate affected people business?

Time yuh stap di foolishness bout FINSAC.

That was the time people lived in.
You do realise that as the world ages interest rates in various parts of the world for different reasons rise?

Do you realise that in 1960s Jamacia 5% -6% would have been considered outrageous? ...and if you borrowed against future earning and they did not materialise you went under?

These people made decisions and expected gains, for whatever reason, never materialised. What did they then expect?

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It is amazing how they expected to reap the rewards of success, but not the pain of failures.

Matters not what they think, they are whimps...not suited to handle the results of their own actions.

They failed at whatever they attempted and should have gotten up like good hardy Jamaicans, brushed off their damn backsides and gotten back to work!

It is shameful to see fellow Jamaicans bend and break under the type pressures they knew was coming...when it finally arrived...and still years after. Obviously the aim is to keep bawling and the people (tax-payers), who absorbed their losses in the '90s will absorb even further losses by gifting them 'bailout' monies.

Not one should get a dime. In fact, they should be charged for perpetuating this nonsense...and fined for not getting up and attempting to rebuild their lives. They are quitters! Terrible examples for their relatives and in a general sense our young.

[Me]

Investors in a country's debt don't look at the macro economic and even socio-political situation? That's news to me.

Whatever the bond is priced on... the rate garnered is no cause for excitement as the premium is still very high even though Jamaica has purchased some stability in the past 2 years by adding massively to its external debt load (maybe 30% to 40% increase) at the current low market rates

I think the Gleaner editorial on the matter is balanced

that's my point..

Those are all factors that the credit rating agencies take into account when issuing their rating on the debt, especially US denominated debt. That is why institutional investors look at it when determining at what level they are willing to purchase bonds. Rating determines price range (which is the same thing as the interest rate range). Selling a good story, a successful road show and execution determines what rate you end up getting. He was able to get the same spread to with a lesser credit than in 2001. That is superior execution. Could he have done better? maybe Did he do better than the previous offering? yes

[Muadib]

You are an idiot.

It has to be said.

[Me]

You see nothing wrong with selling people's loans at 20cents on the dollar, but not offering them the option to pay off the 20 cents themself?

[Karl]

You are an idiot.

It has to be said.

...for thinking these persons, should like any half-way compentent persons, should have been constantly monitoring the climate within which they operated and adjusted accordingly?

...but just a proof in the eating of the pudding review - Where there persons who had ongoing enterprises, or others who started businesses who weathered the storm of those turbulent years?

...are there others weathering the storms of these turbulent years?

Are there persons and business entities who have upticks and downturns in their life-cycles?

Do they blinding stick to operating the exact same way in good times and bad?

Are there persons who have not clue on how to run a business and who are inflexible or arrogant ...either unwilling to adjust?

You and a set of persons keep using as your great example a gentleman who decided to manufacture transformers, got what he thought was a binding order from some entity, borrowed millions against that so-called committment to order, the order did not materialise and he was left holding the bag...

Of course he went under. What is there for him to be bawling about all these years?

He should have started over...even from 'nothing' and got on with his life. He and those who support him are still bawling!

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Then you have this Levy man who borowed in 1994...had a period of not honouring his obligations/servicing his loans...and now is bemoaning the fact that he lost his business?

Duh????

...that is what happens when you cannot service your loans!

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I do not care if the climate was terrible in terms of interest on loans. They are terrible now because of downturn in economies. Those who are in business must make sensible decisions. ...and get on with their lives...not sit around bawling!

If interest on loans were so terrible that the business was not viable - get out! ...if it was that it is still viable - make necessary adjustments.

Simple decisions must be made and living with the consequences of those decisions is but a part of life.

...when all is said and done, we continue living as best we can! ...and one of my pet mantra is: "If you did it once, you can do it again...as long as you have the time. ...and if you do not have the time, it does not matter you will have been 'out of there".

We have this silly Commission of Inquiry. What is it supposed to do? Find out why persons who were not flexible to adjust, fail?

Well blow me down...why don't we all just close our eyes, throw our hands in the air and die?! Times are hard! 'Business is slow'! Running down the same path is a recipe for disaster! Some of us are over-extended! Some have bet on ventures that are failing!

...or should we gallop into failures and then hold an inquiy?

[Muadib]

bredrin.. yuh waaay of base here...

you have a serious mental block when it comes to this issue... it sound like seh yuh had an experience and ah tek it out on others..

[Assasin]

The fact is that was the day they lived in.
the fact is also it was very unfriendly to business.

[Don1]

Ratings are by their nature retrospective... there's a big time lag in their development which cannot take into account rapidly changing conditions since they were calculated and set...which is one reason imho why investors MUST look at current socio-political and socio-economic conditions which change in real time..

If you believe the maintenance of the debt premium represents "superior performance" by Shaw I ovastand. I am not convinced but if you're in the business I can yield to your expertise...that's not my area of competence

What is your estimate of the basis points shaved off the rate due to this superior negotiation.. considering the lower credit profile of our sovereign debt versus 10 years ago?

A ballpark estimate..

[Me]

ratings take into account both factors and are forward looking. some don't believe they change quickly enough, no problem....

The reference rate that those deals should be compared to is not 12 month LIBOR. It is either the ten year SWAP rate or U.S. Treasury.

Omar was 6.7% above the ten year Treasury for his financing with a B+ and Audley was around 4.3% above, with a credit rating of B-. If you are conservative the rating difference is around .4%. so Audley was 2.8%. Some other variables that could reduce that a little, but you get the picture.

It is clear which financing had stronger execution. Does it mean that Audley was a "big performer" ? No, could mean that there was something off with the Omar process....

Anyhow, this topic get enough writing out of me, especially considering it is not that great, like the JDX..

[Muadib]

mi ah tek time learn here.. a little confused..

Are ratings by their nature retrospective or are they forward looking ????

How is it clear which financing had stronger exection ?

Why would someone posit otherwise ?

All politicians are the same.. JLP/PNP.. no difference..

[Me]

LOL Stop you foolishness.

[Don1]

ok boss