MAYBERRY Jamaican Equities (MJE) said it is so far seeing heightened interest in its bonds from retail investors and is stepping up its push to woo more ahead of the closing of the offer on Friday.

Since May 10, MJE has been accepting applications from investors in three bonds it issued seeking to raise between $2.25 billion with the option to increase the issue to raise $3.375 billion, depending on investor interest.

The company said the funds are to be used to partially clear its $2.2-billion debt to Mayberry Investments Limited, while the rest will go towards buying more stocks on the Jamaica Stock Exchange. MJE invests in shares of listed companies and held interest in 40 stocks at the end of 2023. In 2022 the figure was 34.

“It’s going well. There is a significant amount of interest,” Damian Whylie, general manager for asset management at Mayberry Investments Limited revealed in a recent interview with the Jamaica Observer about the sale of the bonds so far.
Both Mayberry Investments Limited and Mayberry Jamaican Equities are sister companies under the Mayberry Group.

Whylie said the interest in the bonds is being driven by a realisation amongst more “evolved” investors who want more than the “next to nothing” they are now getting on their savings, despite higher interest rates over the last two-and-a-half years.

“Where the real fervour is coming from is really from the retail space because, again, I think, what has happened is that the Jamaican investor has started to become a little bit more evolved and so they realise now, especially in a high interest rate regime, that there are benefits to be had by investing in bonds. Typically, people would have stayed away [from] them, except for the large investors, but not so this time,” Whylie added.

But retail investors flocking the MJE bond is not coincidental. While the company is trying to raise billions of dollars on the market, it has set the minimum investment at $20,000, lower than would typically be required for similar investments, and investors can purchase more with additional investments in multiples of $10,000.

Retail investors are otherwise called individual investors to distinguish them from institutional investors such as pension funds, insurance companies, banks, and mutual funds. Whylie said it is normal to see institutional investors coming in later in issues because they have to meet with various committees in-house to discuss investment opportunities ahead of participating.

These investors he said are being influenced by the direction in which they believe interest rates will go over the next few months. The bonds offer returns of 9.25 per cent for the first tranche, which will be on the market for 13 months; 10 per cent for the second tranche, which expires in 26 months; and 10.5 per cent for tranche three that will have a tenor of 36 months. The returns are amongst the most attractive currently in the market.

“10.5 per cent is nothing to sneeze at. We don’t know if you will see 10.5 per cent [interest rate on any instrument], 12 months from now,” he added. “If you were to invest $100,000 in this bond, assuming you get into tranche 3, it’s $10,500 per annum for 36 months,” he said. He indicated that he believes those rates won’t be on offer again, given the expectation that the BOJ will start cutting its policy rate later this year, which he said will cause returns on bonds to decline and make them less attractive than they are now.

“That means really, pretty much every Jamaican should take the opportunity to invest in the bond, because money in the bank is not where you are going to create wealth or even hold it. You have to invest, and I believe this is a great opportunity.”

Governor of the Bank of Jamaica Richard Byles indicated in April that the central bank’s policy rate could be cut in the second half of the year. That will, however, depend on inflation staying within the 4 per cent to 6 per cent band for a long period. So far, inflation has been trending down since it reached 7.4 per cent in January and was 6.2 per cent in February, 5.6 per cent in March and 5.3 per cent in April.

He pointed out that if interest rates start falling later this year, as expected, the stock market will once again “be on the cusp of turning on the burners.”

That will influence where the company spends money to buy more stocks for its portfolio. Currently, though, the entity owns shares in 40 companies, including GraceKennedy, National Commercial Bank, Jamaica Broilers, and Sagicor, it is highly exposed to just two stocks, Supreme Ventures and Caribbean Producers Jamaica. About 55 per cent of the value of its total investments was held in Supreme Ventures Limited, a gambling company, though MJE only owns 18.55 per cent of the entity, with the stake valued at $11.5 billion. Its next biggest holding is a 20.08 per cent stake in Caribbean Producers Jamaica, which is worth about $1.96 billion and accounted for 8.2 per cent of the value of MJE’s investments at the end of last year.

Whylie said he didn’t know what companies would be invested in with the proceeds, but added that he expects the company “will be looking to increase other positions that we have or take new positions to minimise or mitigate that position.”

And he said opportunities abound on the JSE.

“Not because markets are down means that, one, there are no opportunities and, two, you never want to be investing when the market is rising, you always want to take your position prior to, and then reap the rewards down the line.”

The JSE index, which has been in abeyance, with higher interest rates making stocks less attractive, is down just over 1 per cent since the start of the year, though it is way off its 12-month peak.

The bonds are also secured, giving investors protection against default, and the first interest is to be paid at the end of this month on each tranche. Additionally, investors will get to trade the bonds to raise funds when they want to, with them to be listed on the JSE.

“I think it is a flexible bond offer. I think it is a great offer because of the no tax and we are probably at the top, if not the very top, of the range of the highest-priced bonds in the market in terms of returns.”

Interested investors can access the prospectus and additional information on the offering from Mayberry’s website (www.mayberryinv.com) orwww.profitwithpurposeja.com and the JSE website (www.jamstockex.com).