77% of Jordanian bonds covered by major institutions, says minister
50% of purchase orders are American, 27% British and 5% by Pimco, says Minister of Finance Omar Zuhair Malhas
Jordanian Minister of Finance Omar Zuhair Malhas said the bonds issued by Jordan to target international investors amount to one billion dollars on a 10 years term.
Up to 77% of them have been covered by “major financial institutions and investment funds,” Malhas told Alarabiya.net.
The Jordanian minister said the size and speedy coverage during “the first 4 hours after the Euro bonds’ issuance” as well as their price in the London market, reflect the high confidence in the Jordanian economy.
Malhas explained that “50% of purchase orders were done by American financial institutions and 27% by institutions in Britain”, along with a good share for Pimco as he said.
Pimco is the world's largest bond fund.
He stressed that it is “the first time that Pimco invests in Jordanian bonds, which indicates high expectations and trust.”
Malhas said the underwriting applications for these bonds reached around 400 per cent of the issuance value, reflecting international investors' confidence in financial reform programs with the International Monetary Fund.”
He pointed out that sovereign bonds maturing in 2027 were issued at 5.75%, “reflecting a better financial status for Jordan” compared with a 6.25% for other exporters in the market.
Jordan credit ranking was set at B+ by Moodys. As for Standard & Poor's, the credit rating for Jordan stands at BB- / B. JP MORGAN and CITI GROUP banks have organized the issuance.
Malhas confirmed that the last issuance will not raise the ratio of public debt to GDP, currently estimated at 94%, as it was already taken into account”.
He talked about strategies to reduce the debt-to-GDP ratio from 94% to 77.5% by 2021”.
Malhas said that the positive indicators, enabling Jordan to restore the international trust in its economy are the “result of the successful implementation of structural and financial reform program”.
He added that the program is not limited to financial issues as it tackles “labor markets, women empowerment, services upgrade, business environment and competitiveness improvement.”
The minister also talked about important reforms, including those tackling electricity tariff and fuel prices. When asked about the estimated budget deficit, Malhas said that “it is currently valued value at 900 million dinars (1.27 billion dollars)”, stressing that his country is working on reaching a neutral balanced budget with a slight surplus by 2021.
He stressed that, through financial reforms, Jordan is seeking to achieve economic goals set in accordance with the reform program based on a “progressive policy” that guarantees “a better financial situation in the country.”
When Asked about the funds collected from the bonds, Malhas said that “it will be used for the general budget”. About future issuances, he said that “they will publish the estimated scheduling in January 2017”.