Jordan, US to sign deal on new sovereign bond issuance late April

AMMAN — Jordan and the US have agreed on the terms and conditions of issuing government bonds in US dollar in New York after completing the legal requirements for the issuance, a senior official has said. 

After discussions in Washington, on the sidelines of the International Monetary Fund (IMF) Spring Meetings, Minister of Finance Umayya Toukan on Monday told the Jordan News Agency, Petra, that Jordan reached an initial agreement with the US Department of Treasury, which will be officially signed in Amman late April.
USAID will sign the deal on behalf of the US government, the minister said.

The bonds are guaranteed by the US government, which secures Jordan low-cost financing and eases the pressure on local banks. 

The guarantee process was set in motion by President Barack Obama in March 2013, when he visited Jordan. He noted then that a US guarantee, “can help deliver the results that Jordanians deserve… to see their schools better, their roads improved, healthcare, clean water all enhanced”.

On October 31, 2013, the Kingdom closed on its offering of a $1.25 billion sovereign bond issuance.

Toukan described Washington’s approval of the planned issuance “a strong message of support from the US to Jordan” that will enable the government to finance current and capital expenditures. 

He also said borrowing under the bond offering will be 2.5 per cent lower than the cost of loans from local creditors, let alone that it will enhance liquidity at banks and thus ease borrowing for the local private sector.

The minister said the Jordanian side discussed with the US officials the economic reforms under way in Jordan, outlining the latest achievements and efforts to boost economic growth, noting that foreign reserve levels are now growing to reach the 2010 level of $12.5 billion.

Toukan confirmed the IMF executive board of directors will meet by the end of April to endorse a new payment of around $264 million after its mission to Jordan wrapped up its latest review. 

The minister stressed the importance of these IMF revisions, since they are a key condition by the Department of Treasury to secure the Eurobonds that the Jordanian government will sell on the international market in US dollars.