PAN Caribbean Financial Services (PCFS) plans to buy back half of the preference shares it issued in early 2008 in order “to take advantage of current market conditions”, according to the bank.

The bank intends to to open the monthlong share buy back offer on July 9 and offer $200 per stock unit pluse accrued interest.

PCFS said it would acquire the shares via open market purchase and “a specific account will be established at the Jamaica Central Securities Depository (JCSD) for the purpose of acquiring the stock units”.

While giving no further reason than it was taking advantage of prevailing market conditions, the financial institution issued the five-year redeemable preference shares with a carrying rate of 12.5 per cent (tax free) in March 1, 2008 — around the time when Government was issuing securities carrying rates at 15 per cent and higher.

Since the Government swapped its debt in February, interest rates have declined with the latest move by the Bank of Jamaica (BOJ) setting the rate on 30-day certificates of deposits at nine per cent, last week.

PCFS had issued 6.3 million of the shares in 2008 to raise $1.26 billion. Repurchasing half of those shares would mean the bank can further reduce its cost of funds.

In its 2009 annual report, PCFS said “the average rate on borrowed funds and preference shares was 10.34 per cent in 2009 versus 12.28 per cent in 2008”.

Over 63 per cent of the preference shares are held by financial institutions and insurers. JMMB long-term equity portfolio holds almost 40 per cent of the shares while insurers — BCIC, Globe, NEM, and ICWI — collectively hold 17.6 per cent of the shares.