Friday 3 April, 2020

BOJ announces plan to buy government-backed debt

The total budget for the operation was not shared, but the central bank said registered holders of these instruments may make an offer to BOJ to participate in this operation.

The total budget for the operation was not shared, but the central bank said registered holders of these instruments may make an offer to BOJ to participate in this operation.

In line with other monetary authorities globally, and in a bid to pump money into the economy, the Bank of Jamaica (BOJ) has announced a plan to buy Government of Jamaica (GOJ) fixed and variable rate instruments in addition to early redeem BOJ instruments.

The offer runs until June 30, 2020.

The total budget for the operation was not shared, but the central bank said registered holders of these instruments may make an offer to BOJ to participate in this operation.

The notice on the BOJ’s website said the offer must indicate the name of the instrument, the ISIN, the nominal amount for consideration, and the value and settlement dates.

These offers should be submitted via electronic mail between the hours of 9 am and 1 pm each day, with the title “Bank of Jamaica Securities Operation” and sent to email address: BOJ.MarketOperations@boj.org.jm.

As to the pricing methodology, the bank said BOJ instruments will be priced at par. US Dollar Indexed Notes will be converted to Jamaican dollar using the BOJ 10-day moving average selling rate applicable on the settlement date.

Meanwhile, the price on GOJ VR securities is determined by using yield to next repricing. This yield is calculated using the applicable six-month WATBY on the value date to define an equivalent yield for the period to next repricing.

The price on GOJ FR securities is determined using a yield to maturity. This yield will be determined using the average bids of all indicative or actual secondary quotes received on Bloomberg for the respective instruments on value date, the central bank outlined.

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