THE Government plans to restructure its external debt through “buy-backs and interest rate swaps”, but only if market conditions are right.

In its outline of its debt management strategy for the current fiscal year, the Ministry of Finance and the Public Service said “consistent with ensuring effective and proactive debt management the Government will seek to execute a market-friendly transaction, market conditions permitting, with the objective of smoothing the maturities of the external debt and reducing interest rate costs”.

“Liability management tools, including buy-backs and interest rate swaps of high-cost external bonds for lower bonds, will be employed,” it added.

In February last year, the Government restructured its domestic debt by exchanging high-interest-bearing notes for low-interest benchmark notes in the Jamaica Debt Exchange (JDX) programme.

The finance ministry has included a $7.4-billion contingency for the liability management exercise in the current budget, comprising $6.5 billion associated with capital spending and $869.5 million associated with interest payments.

The Government was recently successful in issuing a US$400-million Eurobond to the international capital market that will carry an interest rate that is 3.8 percentage points lower than a note of the same size that will be repaid in May. The bond will be consolidated with the US$350-million, eight-per-cent note originally issued on June 24, 2008 and which matures in 2019.

However, the Government still has US$1.83 billion worth of bonds — excluding the US$400-million eurobond to be repaid next month — that carry higher rates. Of this amount US$1 billion worth of bonds carry rates higher than 10 per cent, including a US$250-million bond that carries an interest rate of 11.625 per cent and which will mature in 2022.