The Government of Jamaica (GOJ) will be seeking to raise up to US$385 million (J$61.21 billion) in the international capital markets as it seeks to sell the future receivables that the Airports Authority of Jamaica (AAJ) collects from MBJ Airports Limited, operators of the Sangster International Airport (SIA).

This was revealed on Wednesday after Fitch Ratings assigned Montego Bay Airport Revenue Finance Limited (MOAIR) an expected BB+ credit rating with a stable outlook for the proposed transaction. Moody’s Ratings also assigned MOAIR a Ba3 credit rating with a positive outlook.

Moody’s credit rating for MOAIR is also in line with Kingston Airport Revenue Finance Limited’s (King Air) rating of Ba3 issued last year while S&P Global Ratings assigned it BB credit rating with a stable outlook. These ratings are above Jamaica’s sovereign credit ratings of BB- by Fitch and S&P Global Ratings and B1 by Moody’s.

MOAIR was set up in the Cayman Islands as an orphan special purpose vehicle (SPV) for this proposed transaction. The SPV will be assigned the rights to collect the monthly and future concession fees from SIA. MOAIR will purchase these rights from AAJ. The non-amortising senior secured notes will have a 10-year tenure and a bullet maturity and should be priced in the coming days.

According to Fitch and Moody’s, the proceeds from the transaction will be used to fund access to clean water through the financing of certain water infrastructure projects, support small and medium-sized enterprises and general budgetary purposes for GOJ. The proceeds will also be used to fund the debt service reserve account (DRSA) equivalent to six months of interest payments, the accrual account with at least US$14.3 million and the revenue account along with transaction fees and expenses plus the purchase price under the true sale of revenue right. The bond is secured by all the assets and accounts of MOAIR and rights under the government top-up agreement.

“The rating reflects the revenue risk related to Sangster International Airport (SIA or Montego Bay Airport) in Jamaica, the main airport and gateway for tourism in the country. It serves one of the most important leisure destinations in the Caribbean. The airport is a strategic asset for the country given the importance of the tourism industry to the country’s economy,” Fitch Ratings stated in its ratings release.

This transaction is the latest securitisation transaction executed by the Ministry of Finance & Public Service (MOFPS) in the last year. GOJ raised a gross amount of $9 billion (US$56.83 million) in March through an offer for sale of National Road Operating and Constructing Company Limited’s (NROCC) 20.0064 per cent stake in TransJamaican Highway Limited (TJH) on the Jamaica Stock Exchange (JSE). That transaction garnered submissions from more than 24,000 applicants and received applications worth $12.28 billion (US$77.54 million).

The MOFPS raised US$480 million (J$75.44 billion) when King Air issued a 12-year secured bond on the international capital markets. King Air initially sought US$440 million for the transaction but received subscriptions exceeding US$2.3 billion. King Air is a Cayman SPV that was assigned the rights to 52.33 per cent share of Norman Manley International Airport’s (NMIA) revenue.

The funds from this transaction went towards paying down some debt and funding some budgetary items like the $11.40 billion one-time reverse income tax credit and $45 billion Shared Prosperity Through Accelerated Improvement to our Road Network (SPARK) programme.

The incumbent Jamaican Government has gone eight years without announcing additional taxes in its annual budget presentations. Those announcements have been accompanied by different revenue measures which have resulted in the tax collectorate foregoing future income. During the 2024/2025 budget presentation by former Finance Minister Dr Nigel Clarke, the proposed revenue measures cost an estimated $25.14 billion. These measures were financed by the King Air bond which was described as a securitisation of government receivables.

For the 2025/2025 budget under Finance Minister Fayval Williams, the proposed measures are expected to cost the Government $9.18 billion (US$57.95 million). The largest cost was the adjustment in the personal income tax threshold from $1.5 million to $1.7 million for the current fiscal year which is estimated to cost $4.8 billion. The proposed adjustment in the personal income tax threshold over the next two fiscal years is set to cost an additional $9.17 billion, with the estimated cost for all three years at $13.97 billion.

Jamaicans are set to go to the polls for the general election in the coming months. Jamaica’s parliament is set to be dissolved by September 15.