AS businesses navigate high interest rates and shifting liquidity, finance leaders are being urged to rethink their capital strategies.

Leading the discussion on financial management in the age of uncertainty, Sarah Cumming, director of corporate solutions and investment banking at Scotiabank, stressed that at a time when cash is gravitating toward money market instruments such as treasury bills and certificates of deposit, the real question for corporate Jamaica is no longer where to find capital, but whether they are positioned to compete for it.

“Currently, what we see in the market is that liquidity is uneven. It’s primarily flowing to money market instruments — a large part of it — given the relatively high BOJ policy rate of 5.75 per cent and relatively high yields that you can earn from BOJ CDs and T-bills (treasury bills] that are averaged between 5.23 and 5.9 [per cent],” said Cumming during the Institute of Chartered Accountants of Jamaica (ICAJ) Business Conference held at Jamaica Pegasus hotel on Thursday.

She noted that fund managers are opting for these risk-free instruments, making access to capital more targeted and competitive. In the corporate issuance space, Cumming advised that chief financial officers must undertake scenario planning to guide strategic decisions. She pointed to global rate movements, referencing the US Federal Reserve’s September 17 decision to cut its benchmark rate by 25 basis points and signal two additional cuts before year end. That, she explained, sets up two possible paths — one through which moderating inflation supports an easing cycle, and another by which persistent global uncertainty results in a “higher for longer” rate environment. In either case, she said, interest rate trends will determine borrowing costs, refinancing risks, and the investment timeline for companies. Cumming added that if local policy rates fall by another 75 basis points, issuers may consider variable rate offerings that allow them to reprice their debt as rates decline. Conversely, in a higher-for-longer scenario, short-term issuances may be more practical, giving firms the flexibility to refinance or reissue debt when interest rates eventually ease.

“For CFOs the message is, ‘Stress test your capital structure.’ What happens if rates stay elevated for another 12-18 months? What if they come down? Are you positioned to move quickly?” she asked. “For CEOs the takeaway is, how do you balance growth ambitions with financial discipline in a market where money is still relatively expensive?”

Additionally, CEOs and CFOs are being encouraged to maintain a clear understanding of what investors want, using that as a barometer for whether their projects are truly bankable. Cumming noted that many businesses overlook this step, but aligning with investor expectations is key to attracting financing in a selective market. She explained that there is now a strong appetite for companies with healthy cash flows, robust governance, and exposure to resilient sectors such as consumer staples, industrials, and energy. Investors, she said, are also showing interest in assets that carry a CARI CRIS-grade rating and those with defined amortisation structures, as well as commercial and warehouse real estate. However, she cautioned that investors remain wary of highly leveraged companies and those exposed to volatile input costs or regulatory uncertainty.

“They are avoiding issuers who seek to refinance in perpetuity; these are issuers who come to raise debt, and at maturity they are refinancing again,” she warned.

Cumming added that investors are avoiding capital raises that are not accretive to a business, emphasising that companies able to clearly articulate their growth strategy and demonstrate financial discipline will be the ones to attract attention and funding. To balance short-term performance goals with long-term sustainability, she urged businesses to strengthen liquidity buffers and manage cash strategically.

“Treat your cash as a strategic asset, not as idle storage,” she advised. “Diversify your funding sources, considering financial services groups that offer both on-balance-sheet lending products and off-balance capital market solutions.”

Experts say Jamaican companies must stress test their capital structures and strengthen liquidity buffers in order to stay competitive amid high interest rates.