Monday, June 30, 2008

'Profits driving corporations'

Published: Monday June 30, 2008

INSTITUTIONAL INVESTORS are profit hounds willing to gobble up individual investors to accrue dividends and capital gains.

In fact, "profitability seems to count for more in Caribbean public companies than corporate governance, price of products, human resource development, and environmentally friendly plants and products," says Douglas Skeete, president of the Barbados Association of Corporate Shareholders.

He recently lashed out at dominant shareholders in the region at the Caribbean Investor Conference held at the Hyatt Regency Hotel in Port-of-Spain, Trinidad, and told BARBADOS BUSINESS AUTHORITY that the most small investors could do was try to protect their investment.

"There are few individuals in the Caribbean with the required financial resources to dominate and control the large public companies in the Caribbean.

"Consequently, we are likely to see a continuation of the situation where Caribbean multinationals preserve their role as dominant shareholders . . . ," Skeete told conference participants.

He said that by marginalising smaller counterparts, shareholders with at least 51 per cent of shares in a company were defeating one of the stock market's objectives – a more equitable distribution of wealth.

"This matter of marginalisation of small shareholders is an important one when one realises that the number of Barbadians owning shares in public companies in Barbados hardly exceeds 15 per cent of the population.

Skeete blamed "the mad rush by public companies to ramp up their size" on their strategy to handle global competition.

Source: Nation Newspapers

BSE to trade over the counter

Published: Monday June 30, 2008

THE BARBADOS STOCK EXCHANGE (BSE) is moving to offset the dwindling number of companies on the local market with a fresh trading platform.

The Over The Counter (OTC) market, which should be introduced by year-end, would allow companies to trade their securities without being listed or traded on the official BSE board.

Over the past five years the BSE has been hit by a number of delistings, including A.S. Brydens & Sons Ltd, Courts Barbados and BWIA, while Barbados Shipping & Trading, RBTT and Barbados Farms are expected to exit the trading board soon as a result of takeovers.

BSE general manager Marlon Yarde along with manager of compliance and regulatory reporting Kelvine Jordan-Rowe and operations supervisor of business development Terry Williams told BARBADOS BUSINESS AUTHORITY last Friday in an exclusive interview that the OTC market would invigorate smaller companies with capital and increase liquidity in the equity market.

"Eventually these companies would develop to list on our stock exchange," Yarde explained.

He acknowledged that the delisting of a number of companies from BSE was negatively affecting the market by limiting investment opportunities and this factor partly influenced the OTC market initiative.

A consulting firm was already conducting a market survey to inform the functioning of this market, which would be the first of its kind in the Caribbean, Yarde said.

Moreover, regulatory considerations were being discussed with the Securities Exchange Commission for OTC trading.

According to Williams, "It allows us to open the sphere to a lot of companies that under normal circumstances would not be of the size requirement to be listed on the stock market. It also captures some companies of critical mass which might not be willing to go to the extent of listing."

Source: Nation Newspapers

Fixed income review

Published: Monday June 30, 2008

Central Bank Announcement

The Central Bank of Trinidad and Tobago (CBTT) announced on June 20 that they would maintain a RepoRate of 8.25 per cent. The decision to maintain the Repo Rate at 8.25 per cent was made even as headline inflation trekked backed up to double digits; from 9.30 per cent measured on a year-on-year basis (YOY) in April to 10.00 per cent in May. The CBTT indicated that the food sub index continues to be the main driver of headline inflation, in May there was a 21.80 per cent YOY increase, as compared to 19.50 per cent in the previous month. There has been a steady increase in the prices of breads and cereals (35.10 per cent), fruits (33.60 per cent), vegetables (22.60 per cent), oil and fats (20.20 per cent) and meats (13.40 per cent). Global increases in the price of cereals have led to the continuing rise in the price of rice and flour in the local market. Core inflation (inflation ex-food prices) remained relatively constant from last months 5.70 per cent.

The Bank (along with most other central banks around the world) emphasised that inflation is their main concern as food and energy prices continue to soar. The CBTT indicated that it would take additional action as needed to address inflationary pressures in the coming months. Even as headline inflation hits 10.00 per cent the CBTT also announced this month, that they will issue a TT$1 Billion bond at 8.25 per cent in order to strengthen its liquidity absorption measures in the financial market. This fact more than likely weighed on the Bank's decision to leave the Repo Rate unchanged at 8.25 per cent

The next RepoRate announcement is scheduled for July 25.

Interest Rate Report and Outlook

US dollar rates

The Federal Open Market Committee (FOMC) on June 25, ended a series of rate cuts in their benchmark rate, the Fed Funds Rate, which began at the start of the sub-prime crisis in September last year, as they left the rate unchanged at 2.00 per cent. This halt in rate cuts came on the heels of the Federal Reserve (the Fed) signaling that inflationary pressure is a cause for concern, as they pursue the goals of both economic expansion and price stability. Many analysts see this move as the first step in the path to raising interest rates, with Treasuries falling as the Fed announcement was made, the yield on the 10-year note rose 2 basis points by the close of trade.

The major cause of concern in the United States Market is inflation, with the Consumer Price Index (CPI) up 4.20 per cent over the past twelve months, compared to an average CPI of 2.70 per cent over the last decade, with the main drivers being oil and commodity prices. Crude oil rose past the $140 mark on June 26, the day after the FOMC announcement as the US dollar declined, in light of the Fed keeping interest rates constant, and as the European Central Bank is forecasted to boost interest rates once again; making commodities cheaper outside the US, spurring on demand. Forecasts suggest that oil will rise further as the summer peak consumption period approaches. Equities took a tumble as oil prices soared, with both the Standard & Poor's 500 and the Dow Jones Industrial down 3 per cent as oil reached the record $140 per barrel. It is forecasted that the Fed will begin raising interest rates in the third quarter, with a 25 basis point increase.

TT dollar rates

As part of their "special sterilisation measures" to mop-up the excess liquidity in the market in light of former RBTT shareholders receiving their cash consideration of approximately TT$8 billion, the CBTT, on June 14 announced the issue of TT$1 billion fixed rate bond, maturing in nine years. CBTT offers investors an attractive investment, that earns investors a coupon interest of 8.25 per cent that is guaranteed by the Government of Trinidad and Tobago (A-rating by S&P), and also allows small investors a chance to purchase a portion of the issue with the minimum face value being TT$1,000 up a maximum of TT$100,000 that can be obtained through a non-competitive bid. All other bids are placed competitively. Bidding on this issue closes today, Monday June 30.

In the several months leading up to the injection of the RBTT/RBC cash into the local system, liquidity in the market has been very tight, however now that former RBTT share holders have received their cash consideration, the market is flooded with excess cash. The result of this excess liquidity is driving deposit interest rates down, with 30, 60, and 90 day deposits earning 6.62 per cent, 6.81 per cent, and 6.95 per cent respectively on average compared to 6.94 per cent, 7.08 per cent, and 7.18 per cent a month earlier. On the longer end of the curve investors can earn on average 7.21 per cent for one year deposits down 19 basis points,a month earlier.

As interest rates in the market dip investors would be seeking alternative investments. Some might take up a piece of the Government issued bonds, others might invest in the local stock market, some will look to overseas investment opportunities and other will invest in the various mutual funds available. Investors however, should ensure that they chose appropriate investments that meet their risk/return objectives.


The yield on the latest 90-day T-bill (auctioned on June 4) has dropped to 7.04 per cent from the previous 7.12 per cent. As previously noted the CBTT is issues a new 8.25 per cent, nine year bond; we can see that the shorter end of the curve has adjusted upwards as investors would prefer investing in the newer issue. The longer end of the curve has remained relatively unchanged.

Source: Trinidad Express Newspapers

Friday, June 27, 2008

Producers Group buys Dutch juice company

Published: Friday June 27, 2008

Continuing refashioning from a company known primarily for growing and distributing bananas to a serious player in Europe's specialist juice market, Jamaica Producers Group this week spent €9.2 million (J$950 million) to acquire a Dutch juice and smoothie manufacturer, Hoogesteger Fresh Specialist BV — a move thatit hopes will give it an important toe-hold on the continent.

"We think it's a good investment," said JP's managing director, Jeffrey Hall.

"This acquisition further underlines the strategy of Jamaica Producers of seeking profitable growth in the premium juice and smoothie category."

Prior to its acquisition by JP, Hoogesteger was controlled by the Dutch dairy group, Feisland Foods and, significantly, also has a presence in neighbouring Belgium.

JP already produces juices and smoothies in Britain through Sunjuice and Serious Foods subsidiaries, but like with Hoogesteger, most of this, is for private supermarket labels.

Plans to squeeze synergies

Hall said the latest acquisition would operate as a separate business unit, but suggested that JP had plans to squeeze synergies out of the United Kingdom and Holland operations, particularly in areas of product development, business coordination and supply-chain management.

Producers Group used to be synonymous with bananas.

It grew the fruit in Jamaica, transported it to England on its own ships, ripened it at its own facilities and then distributed it across the UK.

But as competitors from Latin America challenged the preferential markets that former colonies in Africa, Caribbean and the Pacific enjoyed in the European Union (EU) market, JP began to search for other niches in the fresh and processed foods and juice markets.

It bought juice manufacturing companies in the UK and developed a reputation for providing premium products.

Yet this week's acquisition is comes at a difficult period for JP and particularly its fresh and processed foods division that last year posted pre-tax losses of $711 million.

The banana business had $97 million in pre-tax losses in 2007.

The problem in the fresh and processed food division was major contributor to the group's net loss of $479 million in 2007, coming for the previous year's profit of $2.5 billion.

Chairman Charles Johnson told shareholders in his annual report that the juice and smoothie business "was buffeted by significant increases in raw material commodity prices — principally citrus", which could not be passed along to its customers,. who mostly trade under house labels.

Charles offered three strategies for improvement:

Cost containment;

Strategic alliances with leading juice and smoothie brands; and

Developing marketing opportunities outside the UK.

The Hoogesteger acquisition, it seems, is a part of the realisation of the latter of the strategies.


"It is representative of our commitment to focus on this category across Europe," said Hall.

Holland, he pointed out, had among the best-performing markets in the EU and it was one in which the smoothie market was least developed, providing opportunity for growth.

It was not immediately clear whether the acqusition is entirely internally financed or if JP will ultimately have to take on debt for a deal, which Hall projected would add $3.3 billion in revenue to the group.

"The business we are acquiring has sufficient cash and working capital to continue the operation," he said.

Susan Gordon
Jamaica Gleaner

Hotel company Ackendown to be managed by Sagicor

Published: Friday June 27, 2008

The management of Ackendown Newtown Development Limited, a hotel company part owned by Butch Stewart but controlled by the state, is being outsourced to Sagicor Property Management Limited, formerly LOJ Property Management Company.

But yesterday, new chairman of Ackendown, Joseph M. Matalon, said the move would in no way impact the operation of Sandals Whitehouse, a 360-room hotel and Ackendown's sole asset, but would formalise the transfer of the company's management from part owner Urban Development Corporation.

"The management of Ackendown company itself was carried out by UDC before," said Matalon.

$4.2 million contract

Sagicor Property will take over all the accounting and secretarial functions of Ackendown, he said, under a $4.2 million contract.

Stewart, through his holding company Gorstew Limited, owns 33 per cent of Ackendown and, by extension, has a similar cut of the hotel, which is operated by Sandals Whitehouse Management Limited. The UDC owns 37 per cent and Development Bank of Jamaica (DBJ), 30 per cent.

Matalon has replaced former executive chairman of UDC Dr Vincent Lawrence as chairman of Ackendown. The new board also includes DBJ Managing Director Milverton Reynolds, Winston Bagaloo of PricewaterhouseCoopers Jamaica, Ann-Marie Rhoden, a representative of the Ministry of Finance, Wentworth Charles, a director of the UDC board, and Laurie Ventour.

Stewart's company has managed the Whitehouse hotel under contract since its inception in 2005 at "a minimum guaranteed rent, plus a 'kicker'," said Sandals director of finance Patrick Lynch.

Lynch gave no specifics but said the 'kicker' required Sandals to pay an additional fee for every guest who checks into the hotel.

Five-year contract

The contract runs for five years to 2010.

"It's based on occupancy, not profits," said the Sandals executive. Indeed, Ackendown is yet to turn a profit. Its losses since start-up have accumulated to US$31million, and the company remains heavily indebted at US$89 million.

Finance Minister Audley Shaw has blamed some of Ackendown's lack of fortune on the occupancy levels of the hotel, which he suggested, in a report to Parliament, was underperforming.

Lynch on Wednesday, when asked by the Financial Gleaner, had speculated that the Sagicor Property contract might have been related to the hotel plant, saying, "It may have to do with the management of the building itself," but Matalon said that function resides with Sandals as managers of the hotel.


Sandals Whitehouse is valued at US$71 million, the hotel and land inclusive, following a US$28 million write-down of the real estate assets.

Stewart, in a quarrel with his partners that is now being fought in court, had claimed even before the hotel construction was finalised that some of the work and furnishings were substandard, and that it could potentially dilute the value of the Sandals brand.

But Lynch, in a change of tone this week, said Sandals fully endorsed the plans of Ackendown's new overseers.

"The new board has been assiduous in solving the property's problems," he told the Financial Gleaner.

Stewart has sued Ackendown for US$29.2 million, claiming breach of the shareholder agreement, as well as damage to the reputation of his hotel brand, Sandals.

Ackendown is also in the process of hiring Allied Insurance Brokers to provide insurance services at a cost of US$999,648 (J$71.9 million).

Both the Sagicor Property and Allied contracts, under procurement rules for public companies, must face Cabinet scrutiny prior to award.

Source: Jamaica Gleaner

BOJ hikes interest rates a third time - Move to tackle inflation, strengthen dollar

Published: Friday June 27, 2008

The Bank of Jamaica yesterday jacked up interest rates by half a percentage on benchmark instruments, a move which it said was aimed at taming the inflationary pressures that have squeezed the economy since the start of the year.

The action - which pushed 30-day certificate of deposits to 14 per cent and one-year instruments to 15.5 per cent - came during a week in which the central bank has intervened significantly in the foreign exchange market to shore up the Jamaican dollar against other currencies.

The dollar closed yesterday at $71.91, a two cents depreciation in a day.

Rise in prices

"The prime impetus behind the acceleration in inflation over the past six to eight months has been the sharp rise in prices of internationally traded food and petroleum products," the BOJ said in a statement posted on its website yesterday.

"If left unchecked, this trend will lead to further adjustments in the prices of domestic goods and services even when the prices of internationally traded goods recede."

It's the third adjustment in the signal rates by the central bank year to date in defence of the currency and to contain inflation.

Consumer prices in Jamaica rose 16.8 per cent last year, nearly triple the 5.6 per cent of the previous year.

The central banks' target for inflation, announced after the first two rate hikes, is 14.5 per cent.

The new Jamaica Labour Party (JLP) had projected single digit inflation when finance minister Audley Shaw presented his budget in April.

But price movements of 2.4 per cent in May pushed inflation for the first five months of the calendar year to 9.4 per cent, or 3.9 per cent for the first two months of the fiscal year.

Yet some market analysts sensed heavy jitters, if not panic, on the part of the central bank's response to the market conditions, given the possibility of strong foreign exchange inflows in the near-term.

"The BOJ move could be viewed in some quarters as a shock, especially since there should be US dollar liquidity coming to the market over the next few weeks from the Lascelles/Angostura payment as well as the RBTT/RBC payment," said Vernon James, vice president corporate client services at the brokerage house, NCB Capital Market.

James' references to currency inflows related to the more than US$300 million that Trinidad and Tobago's Angostura Ltd say it will pay shareholders of the Lascelles deMercado Group at the end of April, the second tranche of the US$9.25 a share at which it is acquiring the Jamaican firm.

Jamaica shareholders of RBTT Bank will benefit from its purchase by Royal Bank of Canada, a deal that is now being closed.

While the sharpness of the BOJ's rate rise might have been surprising, the fact that an upward movement came was not unexpected some some quarters.

"I think the market may not have been expecting the increase at this particular time, but it certainly isn't a shock to us," said Jason Morris, senior investment analyst at Jamaica Money Market Brokers (JMMB), the bond traders.

JMMB have been warning recently about the potential impact of inflation and the pressure that was falling on the Jamaica dollar, which closed trading yesterday at J$71.76 to US$1.

The local dollar is in a 'dirty' float against the greenback.

On Wednesday, BOJ intervened in the foreign market, selling US dollars to dealers at $71.76. The rate to end-users was J$71.81 for US$1.

There was a similar intervention a week earlier after the Jamaican currency had slipped to J$71.77.

Morris believes that the central bank's move, will in the short-run, have the desired impact: pulling liquidity from the US dollar market, thus stabilising the exchange rate and tamping down inflation.

But there are potential for negatives.

"It has negative implications for the fiscal deficit, debt ratio and expected growth," Morris warned. "In fact, at our last economic seminar we (JMMB) also pointed out in our investment strategy report that we expected growth to be well lower than what the government is projecting."

Shaw's growth target is three-and-half per cent.

Sabrina Gordon
Jamaica Gleaner

Early close on Lascelles deal - Angostura to pay off shareholders July 28 - Wants to take advantage of synergy

Published: Friday June 27, 2008

Angostura will pay off early the former shareholders of Jamaica's Lascelles deMercado Group it acquired in Jamaica, a move which the Trinidad-headquartered drinks company says will give it an early start in taking advantage of the synergies offered by the acquisition.

"There are many interesting opportunities," said Michael Carballo, the executive director of Angostura, which is a member of Lawrence Duprey's CL Financial Group. "We want to work those synergies," he told the Financial Gleaner.

The company will do so with William McConnell still at the helm of the company, Carballo said Wednesday, immediately throwing out any suggestion of management changes at the conglomerate and its subsidiaries.

Not as clear was how the company's board would fare.

Carballo said that is a discussion to be had with Lawrence Duprey, chairman of CL Financial, Angostura's and soon Lascelles' ultimate parent.

Seat on board

Duprey already has a seat on the Lascelles board. The early closure of the deal reprices the acquisition at US$9.25 per share, down from US$10.65 originally offered.

Angostura had paid down US$4.50 per ordinary share for the more than 68.6 million, or the approximately 39 per cent of Lascelles' voting rights and have up to the end of January 2011 to pay a remaining US$6.15 per stock unit.

But the company this week told the Jamaica Stock Exchange that it will close the debt on July 28, paying shareholders US$4.75 per ordinary stock in keeping with the pre-arranged discount that was set out in its offer document.

People who took up Angostura's offer of US$0.20 a unit for their six per cent Lascelles preference shares will also receive their outstanding half of their payment at the same time.

The final price values the Lascelles stock at about $560 per share, an approximate $70 premium of yesterday's closing price of the LAS stock on the JSE.

"Cheques will be issued to accepting shareholders no later than July 28 through Citibank in accordance with the terms of the offer," the stock exchange said in a posting on Wednesday.

This will clear the way for Lascelles' two top bosses, chairman George Ashenheim and managing director Billy McConnell to hand over 46.6 per cent of Lascelles' voting shares, which they jointly hold in a vehicle called Calla Lilly, for J$2.

It will give Angostura, which is spending an estimated US$685 million on the acquisition, approximately 90 per cent of Lascelles, when the stake it held prior to the take-over is taken into account.

World-famous bitters

Angostura manufactures a world-famous bitters by the same name and also manufactures and distributes rum and other spirits in Trinidad and Tobago, Europe and the Americas.

Lascelles is a multi-faceted conglomerate, but its crown jewel is J. Wray and Nephew, a rum distiller that owns the coveted Appleton brand, one of the fast-growing rum brands at the higher end of the market.

Duprey has already talked of leveraging Angostura's distribution muscle to extend Appleton's global reach.

There have been other suggestions that the distilling and blending of Angostura's rum brands could move to Jamaica as part of the efforts to achieve economies of scale.

Distribution rights

Carballo said Wednesday that the distribution rights for Angostura Bitters and some of the company's prime rum brands have already been transferred to Lascelles.

More shifts are likely to occur, Carballo suggested, but those decisions will be made after July when Angostura closes the acquisition deal.

Carballo said, however, that alongside the spirits operations, Angostura would be holding on to the distribution businesses and Globe Insurance.

"We are keeping the distribution businesses for sure," he said.

"We are impressed with both Globe and distribution."

Indeed, the insurance company, he said, is to be expanded, or possibly merged into CL Financial's insurance operations, which have significant shares of eastern Caribbean markets.

Still, Carballo said while disposal of the other businesses was not off the cards, and that "significant expressions of interest" had come from companies in Jamaica and Trinidad, Angostura would make no decisions immediately on what would go.

For now, he said, "nothing changes."

Similar objectives

In its recently released annual report for last year, Angostura told shareholders that Lascelles was not only a strong company, but that Jamaican firm's objectives was in keeping with its own.

"Lascelles deMercado is a widely diversified group, rich in heritage, with an extremely strong balance sheet and excellent leadership and management team, second to none, focused on building brands and creating shareholder value, totally in sync with our overall core objectives."

In that report, Angostura said that once the acquisition is complete, it will directly control about 20 per cent of Lascelles, with other CL Group subsidiaries having stakes in proportion to their contributions to the financing of the deal.

But how this arrangement will affect the long-term structure of Lascelles was not immediately clear, although there seemed to be no immediate plan for the break-up of the group.

Carballo repeated early assurances from Duprey and McConnell himself that the Lascelles CEO would stay on, despite the planned early closure of the transaction.

"Mr McConnell is to remain; we have a great relationship," Carballo said. "We love Mr McConnell."

Source: Jamaica Gleaner

TSTT Rebounds

Published: Friday June 27, 2008

Telecommunications Services of T&T (TSTT) has recorded a $160 million after-tax profit for the financial year ended March 31, 2008.

Net revenues amounted to $2,958.3 million and profit after tax was $159.9 million.

This compares to a loss of $239.2 million in the previous financial year.

Rakesh Goswami, chief financial officer of TSTT, yesterday described the results as $400 million turnaround.

The company said that TSTT's profits and improvements made to its internal controls and debt collections policy had increased its asset base by seven per cent or $325 million during the financial year.

Investment in capital projects exceeded $500 million and the profit represented a return on capital employed at six per cent.

In a release issued yesterday, TSTT identified five factors which played a critical role in its profitability.

- Reduced bad debt and fraud as a result of improved internal controls related to revenue leakage and improved debt collection.

- Reduced marketing costs as a result of a levelling off in the growth cycle of the mobile market.

- Reduced cable theft/ vandalism costs as a result of increased public awareness as well as more efficient cable laying techniques and security surveillance.

- Lower impairment costs as a result of improved management review processes of the useful life of assets in accordance with international accounting standards.

- Finalisation of the interconnection agreement relating to the mobile line of business

Chief executive Roberto Peon said that the numbers speak for themselves. He said that the company was trimming its excess and focusing on improving its process.

He said that the re-organisation of the company management into lines of business allowed for operational efficiency and cost controls.

“We’ve slashed costs and focused on where we want investment,” he said.

He noted that in the financial year, TSTT faced competitor for its landline service and had seen revenue from international calls cut sharply.

But he said TSTT is looking forward to capitalising on the cable television licence which was awarded two years ago. The company has created a new line of business and former mobile boss, Gary Barrow, has been named executive vice president, IPTV and content.

“The next 12 months will see the company placing emphasis on: deepening the level of integration among new technologies deployed,continuing the fiber-centric modernisation of the fixed line network, upgrading and expanding TSTT's wireless infrastructure and ensuring that employee’s skillsets are augumented to complement the needs of the organisation. These actions will contribute to ensuring that the turnaround of TSTT’s performance during this year becomes sustainable for the foreseeable future,” said chairman Sam Martin in his report.

Source: Trinidad Guardian Newspapers

Thursday, June 26, 2008

NFM seeks price increase

Published: Thursday June 26, 2008

National Flour Mills (NFM) yesterday advised bakers that the price of flour may increase by 29 per cent from the beginning of next month.

President of the Bakers’ Association Leon Phillips disclosed this yesterday.

This follows price increases late last year and as recently as March when the price of flour went up by about 40 per cent.

Phillips said the association was told about the possible increase during a meeting with NFM officials.

Phillips said the bakers asked NFM for a two week grace period before raising prices but NFM gave no assurances.

Phillips said the association advised the NFM that it would not be wise to raise prices again in light of recent increases.

“We told them they have to do something better than that. Of course, they increased the price of flour by roughly 40 per cent in March and before that late last year,” he said.

Another member of the association, at yesterday’s meeting and asked not to be named, said if prices are raised again, some bakeries may go out of business.

“Since the last increases in March, I have lost 20 to 25 per cent of my sales. My production has dropped significantly since the last increases. We are saying how much more can people take? It looks as if soon we will be going out of business.”

The baker also said NFM was justifying its increase by saying that they have been running at a loss since wheat prices rose last year and that is why it must increase prices. The member said despite the likely increase the bakeries have no other choice but to buy from NFM.

“There is nowhere else to purchase from, so regardless of what they do or say we have to buy from them or close down,” the member said.

NFM yesterday declined comment on the price increases and said it would release a statement today.


Bakers’ Association president Leon Phillips said yesterday the price of a loaf of hops bread is now about 90 cents. He said if the price of flour increase the price of a hops bread would go up to around one dollar.

He said the price of a loaf of sliced bread would also go up by roughly 60 to 75 cents.

Source: Trinidad Guardian Newspapers

Wednesday, June 25, 2008

Petrotrin makes $1 billion profit

Published: Wednesday June 25, 2008

State-owned Petrotrin recorded a net profit after tax of $1 billion for the six-month period ended March 2008.

Executive chairman Malcolm Jones, stated that the net profit after tax of $1,072 million was an increase of 162 per cent compared to $408 million for the same period last year.

“The crude oil, natural gas and refined products market remained strong fuelled by increased demand for middle distillates,” Jones stated in published results.

“Platts West Texas Intermediate crude oil averaged US$94.36 per barrel for the six-month period ended March 31, 2008, compared to US$60.64 per barrel for the same period in 2007.

“Refinery margin averaged US$6.60 per barrel compared to US$6.29 per barrel, while natural gas prices averaged US$7.50 per million British thermal units (MMBTU) compared to US$6.67 per mmbtu for the same period last year.”

Jones stated that while Petrotrin’s on land crude oil production remained “fairly stable,” it suffered a setback in its Pt Fortin marine operations due to aging infrastructure and safety inspection works.

“Refinery throughput increased by 3.5 per cent in this period compared to the same period last year,” the chairman stated.

He said Petrotrin is “aggressively implementing” its gasoline optimisation upgrade programme in order to meet changing market demands for cleaner fuels.

The company expects to commission its isomerisation plant later this year.

Source: Trinidad Guardian Newspapers

Will Jamaica beat T&T, Dom Rep to an offshore financial centre?

Published: Wednesday June 25, 2008

On Monday, Reuters reported from New York that Trinidad and Tobago planned to open an international financial centre to compete with Miami and Panama in September, which could include a commodities exchange, as part of their plan to diversify their economy into financial services and away from energy.

Trinidad's Minister of Finance, Karen Nunez-Tesheira, who was in New York to meet with investment banks and credit agencies, told Reuters that such a commodities market could, for example, trade liquid natural gas, methanol, ammonia and other products it exports. She added that accountants PricewaterhouseCoopers are now helping Trinidad and Tobago to review how they might change their tax structure.

The new centre is to be marketed to hedge funds and banks for a range of activities, from transportation finance to capital markets and credit card transactions, whilst in the next couple of weeks, officials from Dubai will visit to explore "using Trinidad and Tobago as hub for monies coming out of the Middle East".

According to Reuters, the Minister advised that the list of banks weighing opening offices in the new financial centre, which will have two 26-storey buildings, includes international investment banks JPMorgan Chase, Lehman Brothers, and Credit Suisse.

This visit to New York follows closely the recent Euromoney Conference, the Caribbean Investment Forum, held in Port of Spain June 11-12, which was well attended by an audience of fund managers, bankers and other financial professionals from all over the region and the US.

The panel discussions primarily focused on Trinidad's planned International Financial Centre (IFC) in Trinidad, and the forum was described by some of the attendees almost as the Trinidad IFC's launch party.
Stocks and Securities analyst Michelle Hirst, in a report on the conference posted on their website, advised that the developers of Trinidad's proposed IFC noted that they had examined many IFCs around the world, particularly Ireland's financial centre located in Dublin, as well as looking at emerging IFCs such as Dubai and Qatar. In fact, one strategy that Trinidad is apparently looking at very closely is halving its overall corporate tax rate (for the entire country), from the current 25 per cent (already much lower than in years past) to close to Ireland's single corporate tax rate of 12.5 per cent.

She believes, however, that Trinidad has not yet decided on the regulatory framework and tax structure that it will implement, a difficult decision as IFCs can either have different taxes and regulations than the other financial institutions in the country, or have the same regulations and tax structure for everyone eg a single rate of corporation tax.

She notes that the panels did not disclose details on the structure of the IFC, merely that it will cover capital markets, banking, insurance and asset management. She adds in her report that the Trinidad Central Bank is in the process of developing four sets of new legislation, namely rules to govern pension plans, banking, insurance and credit unions as part of the
process of updating its financial framework.

In many ways, the recent conference appears to be a follow-on from last year's very similar Caribbean Investment Forum conference in Montego Bay held around the same time, which was unfortunately largely ignored by government officials as well as much of the local media. A report on that conference was only covered in the Gleaner just before Jamaica's election when the issue became hot after the JLP proposed an offshore financial centre for Jamaica in
their manifesto.

That conference had a very high-powered panel, comprised of chief executives from the Caribbean's leading offshore financial centres in Cayman, The Bahamas and the British Virgin Islands.

The Montego Bay forum had been arranged to ask the question as to why Bermuda and the Cayman Islands were so successful as offshore financial centres, and whether other Caribbean emerging offshore centres such as those planned for Trinidad and the Dominican Republic would be able to take advantage of what was at that time described as the "perceived excess demand".

In Montego Bay, Mr Ridley argued that the problems with many International Financial Centres (IFCs) have been based more on perception rather than reality. He noted that in addition to competing with the leading IFC, which is London, much of the business of Cayman, Bahamas and
BVI was really to facilitate London's business.
Caribbean IFCs were therefore merely a small piece of the puzzle in the recycling of the world's money, and are dependent on getting the balance of regulation right for their success in the very competitive environment.

He noted that Cayman operated on the principle that for each regulatory measure introduced, they must be satisfied that: it is necessary; it is appropriate for the nature of financial services business in the Cayman Islands; it is proportional to the identified risks; the regulatory impact is understood; and the
benefits outweigh the cost of the regulation.

Wendy Warren outlined the Bahamian national commitment required to make the business a success. According to her, this requires not just the cross party commitment of current and future policy makers, but the buy in of the general population.

Just as with the tourism industry, Warren advised that every Bahamian realises that they must not let something kill the golden goose of the offshore industry. In her view, the more intimate nature of small populations allowed buy in of the benefits of the offshore industry much more rapidly than in larger jurisdictions.

Other key requirements to successfully conduct offshore businesses include political stability and a strong legal system. For Bahamas, this means specifically, "Respect for the rule of law, due process and the right to privacy of personal financial information".

Additional critical areas include: direct tax system, good telecommunications and the correct skill sets. In the case of The Bahamas, a historically attractive lifestyle is complemented by geographical proximity to the US.

All agreed that, as in any business, the most important thing was to know who was your client, and what market you were in.

Mathavious argued that a successful offshore business required not "a light touch but the right touch", with the key being able to take advantage of opportunity when it came knocking. BVI's growth took place when Panama was in crisis, when BVI took the unusual step of licensing Panamanian service providers. Their further growth had benefited from the uncertainty in the run-up of the transfer of Hong Kong from British to Chinese rule.
Ridley again noted that at one time Cayman had been little more than a mosquito swamp, but had been almost handed the offshore business by Bahamas due to mistakes made by their then Prime Minister Pindling several decades ago. In the case of Panama, it was the invasion by the first President Bush that had really helped BVI.

Whilst all the panellists believed that OECD pressure on their jurisdictions was likely to continue, they argued there was a lot of hypocrisy in this pressure, as they
claimed that all their jurisdictions met international standards, often exceeding those in OECD countries.
Quoting from a background paper written on Cayman's offshore industry, Ridley fully accepted that Cayman should adhere to generally accepted and applied international standards - and not just as they are, but as they evolve. Cayman's experience has been that it was not the absence of regulation that has
promoted business, but the introduction of sensible and balanced regulation as circumstances demanded.
According to the panellists, the most important thing to remember was that international financial services is a business, just like tourism. The market was, however, very sensitive, and countries looking to get into the industry needed to understand what was their advantage eg cost of labour, skills, geography, tax treaties etc.

Countries entering the offshore industry also needed to decide what was their target niche. Bermuda had successfully specialised in insurance, whilst the major international law firms had the power to move the business to various jurisdictions, such
as Cayman.

Mathavious believed that for a new jurisdiction to succeed, it would need a very strong partnership between the private sector and government. This point was echoed by Ridley, who stressed Cayman's culture of consultation and co-operation between the government and private sector. Mathavious added that the jurisdictions that succeeded would be those, like the BVI, that "reputation was a currency".

At that conference over a year ago, the intention of the Dominican Republic to move into the offshore financial business was particularly interesting, bearing in mind their very recent financial crisis and associated debt default. At that time, the Dominican Republic's intention left Jamaica as virtually the only Caribbean country without such a plan. This was despite the fact that, in the opinion of one international consultant involved in BVI's success, Jamaica was one of the most ideal locations in the Caribbean for such an industry.

At the same conference, a former investment banker very familiar with both countries advised that he thought that Dom Rep was a long shot due to its weak banking regulation, recent default and unsophisticated local financial market, all of which he argued was not true for Jamaica.

Nevertheless, it is noteworthy that Economist Conferences, in association with the Commercial Banking Association of the Dominican Republic (ABA), plans to have a Regional Financial Forum on the topic: Harmonising financial regulations in Central America and the Dominican Republic, between July 31 and August 1 in Casa de Campo, La Romana, Dominican Republic.

All of this suggests that the space for Caribbean international financial centres is about to become even more crowded, with Trinidad as a very serious competitor (albeit focusing on its energy niche), and continuing ambitions to create an IFC in the Dominican Republic. It is, therefore, clearly unfortunate that Jamaica's Government did not start the process for the creation of such a centre when it was called for by the Jamaica Chamber of Commerce nearly five years ago, as well as slightly ironic that it is Trinidad that is so carefully studying Dublin's success.

Source: Jamaicaa Observer

Jamaicans borrowing more than they are saving

Published: Wednesday June 25, 2008

Jamaicans are borrowing more than they are saving at banks - but now the deficit at $32 billion is triple what it was three years ago.

At the same time this rise in borrowing continues to shun the manufacturing and agriculture sectors.

Ironically, Jamaicans saved more than they borrowed up to 2004 - $118.8 billion, versus $113 billion in loans. But in 2005 there was a $5 billion deficit, which more than doubled to $12 billion in 2006 and nearly tripled to $32 billion last year.

Saving is categorised among banks' deposits.

Saving by far is the largest contributor to the bank total
deposits. Total deposits also include government, demand and time deposits.

Bank of Jamaica statistics indicate that in 2000 for every dollar loaned by banks an equivalent $1.78 was saved by Jamaicans. But since then the reduction had been rapid.

In December 2000 savings at $72.3 billion was 78 per cent more than loans and by December 2004, savings at $118.8 billion was 4.5 per cent more than loans.

At the end of 2002 loans jumped by 50 per cent to $73.9 billion. It was not to be an extraordinary event as the loans continued to climb: $99.1 billion in 2003; $113.3 billion in 2004; $132.0 billion in 2005; $153.4 billion in 2006; and $195.0 billion in 2007.

The rise in loans could signal prospects for investment-led growth for the stagnated economy. However, the percentage of the loans used for investment in manufacturing and agriculture crawled; signalling that investors continue to shun these sectors which in the past fuelled Jamaica's growth. Manufacturing loans crawled from 4 billion in 1998 to $6.2 billion in 2007, even with devaluing dollar and inflation.

Interestingly 10 years ago manufacturing loans were on par with tourism and the distribution loans. Ten years later, loans to tourism hit a record $29.5 billion, 7 times its 1998 figure, while distribution loans jumped to $18.7 billion, 5 times its 1998 figure.

Agriculture loans hardly moved from $1.9 billion in 1998 to $2.1 billion last year December. The highest figure over the period was $2.28 billion in 2006. It's in stark contrast to personal loans-used mainly for consumption-jumping from $10.6 billion 10 years ago to $73.7 billion in 2007. As a percentage of total loans, personal loans increased from 24.6 per cent to $37.7 per cent.

Construction & land development shot from 2.5 billion in 1998 to $8.9 billion in 2007.

Transport, storage and telecommunication jumped from 1.9 billion in 1998 to $8.1 billion last year. The highest was $8.7 billion loaned in 2004. The sector benefited from the liberalisation of the telecom sector, which saw many entrants in the market including cell-providers Digicel and Miphone.

Source: Jamaica Observer

Fitch gives RBTT higher grade

Published: Wednesday June 25, 2008

Royal Bank of Canada's acquisition of RBTT Financial Holdings has given the regional company a boost in rankings from Fitch.

The new RBC Financial (Caribbean) Limited's individual default rating has been upgraded to 'A+' from 'BBB-', reflecting, said Fitch, "the institutional support from the new, strongly rated parent."

But it also takes into account the sovereign risk associated with Trinidad & Tobago, a Caricom country with a oil and gas based economy in the process of diversifying beyond energy.

Stable outlook

Fitch said its outlook on the new RBC Caribbean was stable.

Royal Bank, which carries a 'AA/F1+ rating from Fitch, completed its US$2.2 billion acquisition of RBTT on June 16 and is in the process of amalgamating its Caribbean operations with that of RBTT's under the umbrella of RBC Caribbean, headquartered in Port of Spain.

The transaction creates a 130 branch network valued at US$13.7 billion in assets spread across 18 country markets.

RBC is itself a well diversified company, said Fitch, with C$627.5 billion in assets as of April 30, 2008.

The ratings
RBC Financial (Caribbean) Limited (formerly RBTT Financial):

Long-term IDR A+ up from BBB-

Short-term IDR F1' up from F3

Individual B/C up from C

Support rating 1 up from 5

RBTT Bank Limited:

Long-term IDR A+ up from BBB-

Short-term IDR F1' up from F3

Individual B/C up from C

Support rating 1 up from 2

RBTT Finance Limited:

Senior debt A+ up from BBB-

Source: Jamaica Gleaner

Sagicor group lists on Jamaica Stock Exchange (JSE)

Published: Wednesday June 25, 2008

Sagicor Financial Cor-poration (SFC), one of the region's oldest insurance companies, yesterday crosslisted on the Jamaica Stock Exchange at a price of $244.11, joining its local subsidiaries Sagicor Life Jamaica and Pan Caribbean as a publicly traded company in this market.

The SFC stock traded 10,000 units on its first day, closing down eleven cents at $244.

"We are pleased to add Sagicor Financial Corporation to our board as a cross-listed security," said JSE general manager, Marlene Street Forrest.

"We have noticed that the security has traded well on the international boards, and expect that the same will occur in the Jamaican market."

Sagicor Financial is now listed in four markets - Jamaica, Trinidad, Barbados and London.

It is primarily traded on the Barbados Stock Exchange, its home market, where it was listed in 2004.


The listing of Sagicor Financial Corporation comes behind the rebranding of LOJ to Sagicor Life Jamaica, and the conversion of Pan Caribbean into a commercial bank, two of the company's major subsidiaries, whose strong performance have kept Jamaica as the top geographic segment in the Sagicor group.

Jamaica, last year, accounted for US$1.1 billion of group assets, valued at US$3.7 billion, but also contributed the biggest chunk of earnings to the group.

For the year ended December 2007, Jamaica net approximately US$45.8 million, representing a 42 per cent cut of the group profit of US$108.7 million.

For the year, the group generated net premium revenue of US$430.4 million, of which Jamaica contributed 39 per cent.


"Our listing on the Jamaica Stock Exchange is an integral part of our business strategy," said Sandra Obsorne, executive vice president and general counsel for Sagicor Financial.

"It provides us with access to one of the more sophisticated and liquid capital markets in the Caribbean, and underscores the importance of our Jamaica operations to the future success of the Sagicor Group,"

Added Philip Osborne, chief financial officer for the group: "We believe that Jamaican operations are quite excellent."

Sagicor Financial, which has a market capitalisation of US$498 million, operates in the life, property and casualty insurance market, banking and asset management business and property development.

Its companies span the Caribbean, United Kingdom and the United States.

Sabrina Gordon
Jamaica Gleaner

Tuesday, June 24, 2008

TCL pledges no increase in price of cement

Published: Tuesday June 23, 2008

There will be no increase in the price of cement produced by Trinidad Cement Limited, at least for now, according to its general manager Satnarine Bachew.

He said despite the high cost of raw materials and soaring fuels prices, the company was trying to maintain the present price of this crucial building material.

Speaking at TCL’s customer appreciation awards ceremony held at the poolside of the Hilton Trinidad and Conference Centre, St Ann’s, on Sunday, Bachew told distributors, “With oil prices at US$140 per barrel, we are struggling to keep the price of cement at its present value.

“Freight prices have increased significantly and raw materials like pozzolan, gypsum and clinker, which we import, are more expensive. But we are trying to hold prices at least until the end of this year.”

Rising labour and utility costs have also weighed on TCL’s production.

Bachew said a drastic escalation in oil prices was the only factor that could change TCL’s mind.

“Fuel is key to this product. It depends on where that goes.”

However, these factors have so far not affected the company’s production capacity of 1.2 million tonnes annually.

Of that, 700,000 tonnes is used locally, while the rest is exported across the region.

no more pollution

Through a campaign titled “from Grey to Green” TCL is said to be on a aggressive campaign to protect the environment.

It wants to prevent dust emissions and clean up areas where it operates.

Bachew said: “We are looking at where our distribution depots are located and the impact on residents.

“Noise pollution and vehicle fuel emissions are of concern to us.”

Source: Trinidad Guardian Newspapers

Citigroup slicing jobs

Published: Tuesday June 24, 2008

Citigroup Inc is about half-way through cutting 10 per cent of the 65,000 employees in its investment banking unit, a person familiar with the job cuts said Monday.

The unit, as previously reported, plans to lay off about 6,500 workers in the division, according to the person, who spoke on condition of anonymity because the job cuts are still under way.

"More than half of those have already been eliminated," the person told The Associated Press.

A major portion of the remaining job cuts are happening this week, The Wall Street Journal reported Sunday, citing people familiar with the matter.

Recover frombad investments

In total, Citigroup has announced 13,200 job cuts this year as it tries to recover from bad investments on mortgages and leveraged loans that cut billions of dollars from its portfolio. Citigroup, which is the largest U.S. bank by assets and employs more than 300,000 people worldwide, posted a $5.1 billion loss in the first quarter and a nearly $10 billion loss in the fourth quarter of last year.

Many bank analysts expect the company to report another loss for the current quarter.

Source: Jamaica Gleaner

Monday, June 23, 2008

A rude awakening

Published: Monday June 23, 2008

The RBTT Deal

As former RBTT shareholders begin receiving consideration for their RBTT shares commencing today, small investors are in for a rude awakening as they seek to encash their RBC share certificates.

It was stated in the Directors' Circular issued by RBTT Financial Holdings Limited prior to the approval of the Amalgamation, that "...RBTT, through its wholly-owned stockbroking subsidiary, West Indies Stockbrokers Limited, will facilitate trading in RBC Common Shares in order to permit such sales on a real time basis..." Through a recent advertisement in the print media, the investing public has been made aware of the availability of a facility being offered by the investment house referred to in the Directors' Circular, through which former RBTT shareholders will be able to convert their RBC shares into cash.

Using the collar price of US$48.98, an RBTT shareholder owning 100 shares will be entitled to 5 shares in RBC. A preliminary calculation utilising only the fixed portion of the fees of the advertising brokerage firm (excluding commission fees) suggests that the former RBTT shareholder who now possesses 5 RBC shares could be paying over 10 per cent of his shareholding in fixed fees to the investment house. On the other hand, an RBTT shareholder owning 500 RBTT shares (25 RBC shares) could be paying out approximately 2.2 per cent of his shareholding in fixed charges. This further emphasises the disadvantage the small shareholder faces when trying to encash the RBC shares being received.

The question that should be most pertinent in the minds of former RBTT shareholders at this point in the process is, what alternatives exist? The Circular also stated that "Other stockbrokers, operating in Trinidad and Tobago and in other regional markets, may also offer similar services." RBTT shareholders can expect other Brokers to provide a similar facility for monetising their RBC shares.

Bourse Securities Limited is currently finalising the details including cost structure that will apply to holders of RBC share certificates wishing to sell their RBC shares in the foreign market in which it is listed. This service will allow former RBTT shareholders to easily convert their RBC share certificates into cash. Utilising the facilities of an internationally recognised Broker, Bourse will be able to offer the investor a very competitive package for encashing his RBC shares.

Shareholders are advised to shop around in the brokerage community to get the best value for encashment.


After culminating the 2007 financial year on a very impressive note, the ANSA McAL Group of Companies (AMCL), revealed a less notable performance for the first quarter of the 2008 financial year. For the three months ended March 31 the Group produced marginal growth in its EPS of 1.5 per cent from $0.67 to $0.68.

The Financial Services Sector reported a weaker year on year performance. A significant one-off gain in the first quarter of 2007 due to the sale of a regional investment contributed to the Sector's less favourable first quarter 2008 performance. Additionally, slow demand for advertising in the Media Sector also affected AMCL's performance during the first three months of the year.

A healthy 15.6 per cent increase in Third Party Turnover was recorded as this component increased from $1.1B to $1.3B. Operating Costs proved to be an obstacle for the Group as Operating Profit experienced a marginal 6.5 per cent increase from $202M to $215M.

The Group succeeded in keeping its Finance Costs under control as this component fell by 1.8 per cent to $28.5M, while Share of results of Associated Companies fell slightly from $2M to $1.6M.

Profit before taxation moved up 7.6 per cent year on year to $188.2M. The Group was disadvantaged by a 23.8 per cent increase in its effective taxation rate from 21 per cent to 26 per cent which resulted in an insignificant 0.4 per cent increase in Net profit for the period to $138.6M.

In first quarter of 2008 the Group attributed a smaller percentage of Profit for the period to Minority Interests (15.4 per cent in the first quarter of 2008 vs 16.1 per cent in the first quarter of 2007) which gave way to a 1.3 per cent improvement in Profit Attributable to Equity holders from $115.7M to $117.2M.

The chairman of AMCL advised that all Sectors with the exception of the Financial Services Sector and the Media Sector reported results significantly ahead of 2007. Also reflected in his statement was the fact that the Group has already begun to witness in the second quarter, a reversal of the trends that were experienced in the Financial Services and Media Sectors during the first three months of 2008.

Despite a slow start to 2008, this quarter's results is being matched against a very strong first quarter 2007 performance which as boosted by a one time gain. Exhibit 1 illustrates the Group's historical EPS trend. As is evident in the graph, the first quarter has typically been one of the weaker quarters while the Group has developed a long standing history of a stronger second half of the financial year. Barring any major unforeseen obstacles, this year is expected to continue along this trend as the Group anticipates achieving all its 2008 targets.

At the current price of $59.30 there is still significant upside potential in this stock. As such BOURSE maintains a BUY recommendation.

Source: Trinidad Express Newspapers

Friday, June 20, 2008

Mayberry shareholders demand bigger dividend payout

Published: Friday June 20, 2008

Mayberry shareholders are looking for dividend distributions of at least 30 cents per share based on fees earned from the Angostura buyout of Lascelles de Mercado. As the lead broker for the largest acquisition in Jamaica's history, Mayberry earned substantial fees and capital gains which sent its first quarter 2008 earnings to record highs of J$630 million from J$58 million earned in the first quarter of 2007.

"We understand that you want to see increasing dividends," Gary Peart, Mayberry's chief executive officer explained to shareholders, "in fact, we have gotten calls for an interim dividend payout. However, we have to look long term. Our business is very volatile and the outlook can change rapidly.

We will wait until the end of the year and we will make our distribution then as usual."

Over the past two fiscal years, Mayberry shareholders have seen the dividend payout increase by 100 per cent from 10 cents per share to 20 cents per share. Peart stated that Mayberry has one of the highest dividend distribution on the Jamaica Stock Exchange. "While 10 cents and 20 cents might not seem like a lot a money, this represents payout of $120 million in 2006 and $240 million in 2007. Our net profits in 2007 was $372 million and so we paid out over 60 per cent of our profits. There are only a handful of listed firms that do so."

Peart noted that instead of making a large payout, Mayberry is actually looking to deploy the proceeds of the Lascelles transaction into another investment. While he would not give details, Peart stated, "We believe that with our expertise and research capabilities we will be able to find such an investment that will give the same type of returns earned by Lascelles in another three to five years." Peart and Mayberry chairman, Christopher Berry, noted that the country faced a number of challenges which impact the firms. Berry told shareholders, "The challenges of crime and inflation is bad for the economy and especially the tourism industry. The rising nature of these threats point to the economy slowing down." Peart explained further, "While we are bullish on Jamaica, we are patient investors. So although crime and inflation are real threats to economic stability, we believe that there are opportunities out there. And so we will hold our capital until the time is right."

Berry informed shareholders that the ideal acquisition is a firm that, "maintain their cash flow going forward and are conservative."

Peart noted that the company has diversified its core business in line with regulatory requirements. "The regulators define the core business of a securities dealer as trading, not net interest income. Therefore the message is that a securities firm must generate over 50 per cent of income from trading and we at Mayberry earn over 60 per cent - one of the highest ratios in the market." On the strength of its trading abilities, the firm earned the JSE distinction as number one in volume, value and number of transactions for 2007 and year to date, 2008. "We don't start the year aiming to be number one in anything, we actually try to increase quality of relationship with our clients, and so becoming number one is just a consequence of that relationship."

Beyond the profits earned by the company, Peart focused much of his presentation on the firm's corporate social responsibilities. "Over the years, we have done a lot of work with various schools and charitable organizations and we have taken a decision to formalize the effort." Peart announced to shareholders that Mayberry's marketing manager, Kayree Berry-Teape has been appointed to the post of Chief Executive Officer of the Mayberry Foundation.

Speaking to the Observer yesterday, Berry-Teape outlined the vision of the Foundation. "The whole aim of the Mayberry Foundation is not to do one off projects, but projects with a lasting effect." She explained, "I feel strongly that while we need to assist persons, it is very important not to give for giving sake but to make a difference. For example, the Foundation will embark on long term benefits such as reading rooms and computer labs which facilitate e-learning that then becomes a resource room."

Among the many projects that the brokerage house is involved in, Berry-Teape highlighted the relationship with Naggo Head Primary. "Last year we gave 10 scholarships to children who passed for Campion with grades above 90. These children are the assets of our country and we must ensure that they have the best educational opportunities."

Source: Jamaica Observer

Pan Caribbean now a commercial bank - Starts offering services June 23

Published: Friday June 20, 2008

Pan Caribbean, the Jamaican merchant banking subsidiary of the Sagicor Group, has completed its transformation to a commercial bank and will begin offering the requisite services to client as of Monday.

In fact, the company announced yesterday that it has dropped the 'merchant' from its name and will now be known as PanCaribbean Bank.

Henry Pratt, who headed PCMB, will continue to run the new bank, which is capitalised at $3.3 billion.

"We will complete our conversion on June 23 and our branches will be open as usual to our customers and the general public, offering new commercial banking products and services," Pan Caribbean said in its statement.

"Our official launch activities will begin early July."

Pan Caribbean group, which has assets of about $50 billion, will become the seventh Jamaican commercial bank, still shy of the 11 that existed prior to the mid-1990s meltdown of the financial sector, which saw the collapse of several banks and insurance companies.

At the time of the financial sector crash, there were more than 30 merchant banks in the market.

In the wake of fallout, several of the ailing banks, the portfolio cleansed of bad debts acquired by the Government, were merged and sold off.

The emerging philosophy in the aftermath of the crisis, that cost taxpayers over $140 billion, was to frown upon financial services conglomerates - or that there should be clear divisions between the various parts of their operations.

But those positions, if not changed, are now less rigid, leading to the Government's willingness to consider granting commercial banking licences to entities that, like Pan Caribbean, offer a range of finance-related services, including stock and bond trading.

In fact, the finance minister, Audley Shaw, is now considering a commercial banking licence for Jamaica Money Market Brokers (JMMB), the island's largest bond traders.

At a recent JMMB investor briefing, Shaw had said that Jamaica could do well with greater competition in the commercial banking sector.

While Shaw only formally signed off on the issuing of Pan Caribbean's licence on June 10, the previous administration had signalled before it left office last September that the firm would get the green light - a path continued by Shaw when he assumed the portfolio.

Granted April 2006

Indeed, approval for the licence was granted back in April 2006 by former Finance Minister Dr Omar Davies.

The bank has existing branches in Kingston, Montego Bay, Mandeville, Savanna-la-Mar and Ocho Rios.

Pan Caribbean's CEO, Donovan Perkins, told shareholders at the company's recent annual general meeting that the conversion to a commercial bank cost $200 million, with the bulk of the money spent on technology infrastructure.

"The bank should be able to start recouping the cost by the fourth quarter of 2009," he said.

Sabrin Gordon
Jamaica Gleaner

COB restores loan insurance

Published: Friday June 20, 2008

THE CITY OF BRIDGETOWN (COB) Co-operative Credit Union Limited has relaunched its consumer loan and mortgage protection insurance to cushion the blow of financial stress that may arise due to unforeseen circumstances.

Through its strategic partner, Guardian Life, the insurance will be offered to credit union customers at a competitive price.

The previous arrangement by another company had been suspended more than a year ago, due to their operational demands.

Speaking during the launch of the new product at the credit union's Lower Broad Street, Bridgetown office last week, chief executive officer Steve Belle said the initiative represented COB's continued thrust not only to protect members' interests, but to ensure their life achievements were not wiped out at the first sign of misfortune.

"COB has sought to offer an element of protection for those members who have mortgages and consumer loans and in the case of any eventuality, family and relatives would be spared the onerous burden of repaying a debt left by a loved one," he stressed.

Guardian Life's manager, life and employment benefits, Winfield King, said they were pleased to work with COB on the initiative.

Source: Nation Newspapers

Wednesday, June 18, 2008

A golden performance - Jamaica Broilers reports record sales of $20b

Published: Wednesday June 18, 2008

In 10 months, Jamaica Broilers Group's nascent ethanol business has blossomed into a $6 billion revenue turner for the poultry producer, and a golden opportunity to grow sales and profits.

For a second day this week, the JBG stock closed higher on the Jamaica Stock Exchange, ending Monday at $5.76 on a 46 cents capital gain, after hitting a high of $5.90 in intra-day trading; and closing six cents higher at $5.82 on Tuesday.

Ethanol, at year-end May 3, 2008, contributed $321 million to the earnings of the Robert Levy-led group to closely rival the feed segment, all within the company's fourth quarter, when half or $3 billion of JB Ethanol Limited's sales into its US market were recorded.

With the exception of its fish business, the group's performance improved across all business segments. Poultry remained its core business and the most lucrative with $8 billion of sales and a $1.15 billion contribution to operating profit.

Feed and farm supplies, whose turnover Broilers said, was helped "nominally" by increases in world grain prices, notched up sales of $5 billion and profits of $445 million on thje back of increased prices to the market, according to group financial controller Ian Parsard.

Withstood many challenges

"This 50th year of operation was an important one for the group in which we withstood many challenges presented to us subsequent to our entry into ethanol processing and exporting," said president and CEO Levy and chairman R Danny Williams in a statement to shareholders.

Having overcome those challenges, which includes rising world commodity prices, and second quarter glitches in its ethanol contract, the company in existence since 1958 is reporting one of its best years of performance.

The year-end numbers reported by Jamaica Broilers are telling:

Group turnover was up 78 per cent, year on year, from $11.5 billion to $20.5 billion.

Gross profits hit $3.3 billion, up 26 per cent.

Operating profit grew 56 per cent to close the year at $1.2 billion.

And net profit, though diluted by a four fold growth in debt servicing charges of $338 million for the company, still ran 36 per cent higher, from half a billion dollars in 2007 to $696 million in the current period to return earnings per share of 58 cents, up from 47 cents.

Operating expenses were also up in the year, by 14 per cent.

The company's fish business lost $79 million in the year, not its worst performance - losses have hit $100 million in the past - but still a substantial decline from 2007 when the losses had been narrowed to $23 million."The fish operation faced new challenges in 2007/08, effectively reversing the gains that we made in 2006/07," said Parsard on Tuesday.

"The management team at Aquaculture continues to implement significant changes to the operations and business model and is confident that the fish operations will be profitable in 2008/09," he told Wednesday Business.

Broilers said the segment was hit both by rising feed prices and a "resistance by the market to price increases" in overseas markets.

In the periods ahead, the performance of corn prices, which hit a record US$7 per bushel last week, are expected to pose new challenges for the group, whose production costs in the 2007/08 year breached $17 billion.

Source: Jamaica Gleaner

RBTT to retain identity for now - Bank merger finalised Monday

Published: Wednesday June 18, 2008

Royal Bank of Canada and RBTT will continue to operate under their respective brand names, for now, said a spokesman for RBTT Financial Holdings group in the wake of Monday's announcement that the merger transaction has been finalised, creating a new in the region under a cash and shares deal valued at around TT$13.7 billion (US$2.2 billion).

"RBC and RBTT are both very strong brands with which we are very happy," said Paul Charles, head of RBTT group communications in response to Wednesday Business queries.

"We, therefore, have no immediate plans to re-brand. For now, we will continue to operate under our respective names, and during the integration we will determine the re-branding strategy."

No retrenchment of staff

The Canadian bank has said it plans no retrenchment of RBTT staff, which numbers about 7,000 across the region.

On Tuesday, Charles also said the same holds for the merged bank's country managers in the 17 markets where RBTT operates commercial banks and that the only movements would come from "normal activity" such as retirement or promotions.

They join a banking group that is number one in its home market, and has 75,000 employees in 47 countries.

The RBC/RBTT merger deal has closed eight months after its October 2007 announcement. Payment to RBTT shareholders is expected to start today, June 18. The stock has also been delisted from regional exchanges.

"RBTT's network complements our Caribbean retail banking operations perfectly," said Jim Westlake, RBC's head of International Banking and Insurance.

The deal gives the new RBC Caribbean 130 branches across the region, assets of US$13.7 billion and 1.6 million clients.

Behind scotiabank

The merger has placed RBC/RBTT ahead of CIBC-owned FirstCaribbean - which commands assets of US$12 billion, and has 100 branches in 17 countries - in the regional banking sector, but behind Scotiabank whose network is the most expansive, numbering 200 branches across 21 markets, and assets of some C$17 billion.

The amalgamation of the banks' operations will occur in the coming months, said a joint release from the parties to the deal, led by RBTT group CEO Suresh Sookoo, and RBC's current head of Caribbean banking, Ross McDonald, who "will share responsibility for leading a smooth transition."

Senior management from both organisations will be integrated, the release said.

Sookoo will head the new RBC Caribbean, whose corporate headquarters will be Port of Spain.

Source: Jamaica Gleaner

Jamaica raises US$350m overseas - Analysts say 8% bond likely to disrupt yield curve

Published: Wednesday June 18, 2008

Jamaica yesterday raised US$350 million (J$25 billion) on the international capital markets, through a 10-year placement that was fully subscribed at market close.

The 2019 notes were issued at a coupon of 8.0 per cent and priced to yield 8.375 per cent, which is about 400 basis points above comparable US treasuries.

The take up gives the Finance Ministry 57 per cent of the targeted J$43 billion (US$600 million) that it plans to tap from the big capital markets overseas. At 8.0 per cent, the 2019 has one of the lowest coupons of the GOJ global bonds in issue, comparable to the GOJ 2039.


Its commendable, says Dean McDonald, assistant vice president economic analysis and research at First Global Financial Services that Jamaica was able to raise that level of debt financing from a market that is currently risk averse, but the pricing of the bond, he said, is likely to result in a correction to the market.

"This stands to affect the entire yield curve in a negative way, and indicate that GOJ bonds are not priced properly," said McDonald.

"Come tomorrow we will see bond prices fall to compensate for the higher yield."

The GOJ 2039 bond though similarly priced 8.0 per cent carries a yield of 8.18 per cent.

Philip Armstrong, senior vice president capital markets at PanCaribbean Financial Services Limited, had similar concerns but was more inclined to look at the bright side.

Many fiscal issues

"Although it (the bond) traded through the existing yield curve, we need to put things in perspective - Jamaica is a single B credit with many fiscal issues in an extremely hostile external environment, so to raise US$350 million at 8.375 per cent yield to maturity is very commendable," said Armstrong.

It's not immediately clear how heavily subscribed the offer was, but McDonald said the ministry's target was US$350 million.

Joint lead arrangers of the placement were Deutsche Bank and Morgan Stanley.

"The transaction was announced, launched and priced within four hours, the finance ministry said, closing at noon.

The bond will be redeemed in three equal tranches, over the years 2017 to 2019.

Jamaica's external debt is 'B' by Standard & Poor's; 'B1' by Moody's.

The country's national debt stock has risen above J$1 trillion since March 2008.

Sabrina Gordon
Jamaica Gleaner


Published: Wednesday June 18, 2008

The International Monetary Fund (IMF) is predicting tough times ahead for the Barbados economy and has suggested some key actions to keep the country economically stable.

And while Government, labour and the private sector met yesterday at Sherbourne Conference Centre to come up with solutions to tackle the troubling rising cost of living, the IMF cautioned that inflation could jump to nine per cent before yearend.

The only consolation from the multilateral institution was that the spike was expected to be temporary.

The statement came yesterday following discussions between the Washington-based institution and local officials two weeks ago.

"The discussions were held against the backdrop of significant challenges arising from a weaker external environment and mounting international price pressures for food and fuel," it said.


The IMF, therefore projected a slowdown in economic activity for the rest of the year to 2.25 per cent down from the 3.25 per cent last year.

In addition, the IMF said the country's current account deficit would rise to 8.5 per cent from 7.25 per cent.

"With the government's options constrained by high public debt and the exchange rate pegged to the United States dollar, the mission recommended a coordinated policy response, involving the government, the central bank, and the social partners to share the burden," the statement pointed out.

Among the IMF's recommendations were:

* targeted support to vulnerable groups while still bringing down public debt;

* monetary policies should be aimed at containing inflation;

* moderation of wage demands to ensure stable prices and protect jobs; and

* strengthening of financial sector regulations and better cross-border cooperation among regulators.

Source: Nation Newspapers

Govt bonds for RBTT investors

Published: Wednesday June 18, 2008

Government has issued bonds worth $1 billion as a savings option for RBTT shareholders and other investors and as a measure to mop up excess liquidity in the local financial system.

The Central Bank is also continuing sterilisation measures to ease the pressure of rising inflation and to absorb the effects of the $4.7 billion RBTT shareholders will receive in cash with the completion on Monday of the $13.7 billion deal that saw the Royal Bank of Canada acquiring the RBTT banking group.

Initially announced by Finance Minister Karen Nunez-Tesheira in Parliament last Friday, the government bond issue was made available to investors on Monday and will mature in nine years.

The bond issue has a coupon rate of 8.25 per cent per annum and is the first Government issue for the year.

Bonds have been issued in multiples of $1,000 and are available through the Central Bank's automated auction system.

The offer closes on June 30 and the bonds will be dated July 2.

Interest on the bonds will be paid twice a year.

Government has said the Bond is being issued to address domestic liquidity management.

Central Bank deputy governor Joan John said yesterday that the Bank was in contact with investment firms in the private sector who are preparing other financial products to foster investment and alleviate liquidity.

With Government offering the bond issue, she told the Express in a telephone interview that investors may consider this as one alternative.

The Central Bank will continue to monitor the system and will execute its normal operations to address liquidity concerns caused by the RBC transaction as well as other factors that could affect inflation.

John said the Central Bank would continue to take measures to retain control inflation.

One of these measures implemented by the Central Bank in recent months has been to increase the reserve requirement of commercial banks in the country.

Another has been the increase of the repo rate (the Central Bank's overnight lending rate to banks).

This in turn has forced banks to raise lending rates for banking products such as a car loans and mortgages in an effort to reduce credit expansion in the country.

Leading economists have suggested that the Central Bank may adjust the repo rate upward again to further alleviate consumer spending and credit.

A local financial expert told the Express on condition of anonymity that this latest bond issue does not work well for a country like Trinidad and Tobago that could better use the cash for development. The expert suggested that it was another example of Government "crowding out" the private sector and simply sterilsing the funds.

Source: Trinidad Express Newspapers

Tuesday, June 17, 2008

AIG board replaces CEO with former Citigroup executive

Published: Tuesday June 17, 2008

American International Group Inc, which has lost billions on bad bets on the mortgage market, on Sunday named former Citigroup executive Robert Willumstad to replace the insurer's besieged chief executive.

Willumstad, 62, will take over from Martin Sullivan, 53, effective immediately, the company said.

Stephen Bollenbach, the former CEO of Hilton Hotels Corp, will be named AIG's lead director.

AIG named Willumstad chairman of the board in fall 2006, about a year after Willumstad left his post as president and chief operating officer at Citigroup. Citigroup had passed him over for the CEO job - which went instead to the now-dethroned Charles Prince.

Sullivan, a native of England who had worked with AIG for 37 years, now joins the long list of CEOs who have been pushed out since the credit crisis started slamming the financial services industry last year.

That list includes Citigroup's Charles Prince, Merrill Lynch & Co's Stanley O'Neal and Wachovia Corp's Ken Thompson.

Big losses

New York-based AIG - the world's biggest insurer with US$1.05 trillion in assets - lost US$7.8 billion during the first quarter of the year due to investments and contracts tied to bad loans.

The company operates in Jamaica through subsidiary American Home Assurance Company, headquartered in New Kingston.

AIG's first-quarter deficit was even more massive than its fourth-quarter loss of more than US$5 billion. After its two straight quarterly losses, the insurer revealed plans to raise US$20 billion in fresh capital - but investors reacted sceptically, unsure that extra cash would solve the insurer's problems.

Shares of AIG have fallen by more than 50 per cent over the last 12 months, closing at US$34.18 on Friday.

"In the coming months, we will conduct a thorough strategic and operational review of AIG's businesses and their performance," Willumstad said in a statement Sunday.

Source: Jamaica Gleaner

Friday, June 13, 2008

NCB Capital Markets in search of big risk takers - Creates high return PPN, boosts team

Published: Friday June 13, 2008

NCB Capital Markets Limited feels it has done a poor job of convincing enough investors that it can make them wealthy.

So now the brokerage, Jamaica's largest, is pumping about $15 million into a marketing campaign to develop a better message and to connect more directly with investors, starting with those of high net worth.

The brokerage rolled out the campaign two weeks ago to increase visibility and garner business from private investors.

Managing director, Christopher Williams, said he had infused 'young blood' or so-called 'wealth advisors', into the company to give impetus to the plans.

Their job is to get personal - that is, engage in direct sell of the company's products and customise investment packages to suit the client's risk profile.

Principal Protected Notes

The brokerage has already began the hunt for market among high rollers. Last year it created and offered under private placement principal protected notes to local investors.

A PPN is a financial product whose returns are based on the performance of its underlying security. If the product is created around stocks, the returns would track the performance of those equities on the market.

"The distinguishing feature is that the principal amount - your original investment - is 100 per cent protected," said the 2007 annual report of the brokerage's parent, NCB group.

The note that NCB Capital Market issued was tied to global stocks.

"These offerings demonstrate that we are providing solutions to meet the needs of clients who are seeking higher than average returns," said the report.

Williams said Jamaica's tryst with alternative investment schemes suggested that brokerages like NCB Capital Market needed to redefine their communication strategy to reach those clients.

Market risk

A local think tank, CaPRI, has estimated that the alternative investment schemes, up to last year, were valued at J$100 billion to J$200 billion, but that was before the collapse of one of the more popular entities, Cash Plus, which has been placed in receivership.

Investment houses to now have underestimated the market's risk appetite and investors' thirst for big returns.

Indeed Williams, as he rolled out the company's new 'I Am' campaign to be initially targeted at high net worth clients, said NCB Capital Market had done a poor job of selling itself as a wealth creator, and promoting the accessibility of its services, even as the forex trading schemes were snagging club members.

"It forced us as an organisation to look at ourselves," said Williams.

"Many customers didn't even know that in each branch there is a NCB Capital Markets representative."

Back to the drawing board

It also forced the brokerage "back to the drawing board," he said, to devise new packages for clients.

Williams' announcement followed the release of the company's first quarter results for the period ending December 31, 2007, which reflected flat net profit of $416.7 million compared to the $416.9 million it made at December 2006.

Growth in the period was hampered by a $73 million decline in trading income.

Williams said NCB Capital Markets' products are to be worked around three components - high returns, minimum taxes and protected principal.

"We have built products around those three; we have brought them into the global framework." he said.

Richard Deane
Jamaica Gleaner

JP bites back - Joins GK Foods in snack export market

Published: Friday June 13, 2008

Mindful that it has a new and aggressive competitor in the local snack food market, JP Tropical Foods, a division of the Jamaica Producers Group said Thursday it has revived overseas sales of its 'St Mary's' line of tropical snacks.

JP, which only about two months ago resumed its local snack operations, said it returned to the export market last week with shipments to New York and London.

Its distributors are Eve Sales Corporation in the United States and Wanis in the United Kingdom who channel JP's snacks to ethnic stores and the Jamaican and Caribbean diaspora markets.

According to JP's commercial director, Rolf Simmonds, the company is exporting straight from its Jamaican factory, with no help from the Dominican Republic operation.

"We want 20 per cent of sales to go to export markets by year-end," said Simmonds.

"At present, we are targeting the UK, and the US."

During the month of May, JP sold over three million bags of St. Mary's Banana Chips in Jamaica according to Simmonds who clarified that for now the company would only be exporting its banana chips line.

Target market

Until recently, the St Mary's brand Banana Chips launched six years ago was initially targeted exclusively to the Jamaican market.

The conglomerate's banana crops were decimated in last August's hurricane, putting both its snack business and export of the fruit in limbo.

Normally, the conglomerate exports 85 per cent of its banana crops, but seems to have given even more of the produce over to its snack operation to build out a bigger overseas market under its expanding prepared foods business segment.

"The shift to exports has not been difficult," said Simmonds.

"Our distributors tell us that Jamaicans overseas present a ready market for the leading Jamaican brands in each segment, so we have decided to start there," he said, while also acknowledging that GK Foods, a division of GraceKennedy, was a direct competitor in the overseas markets.

Great track record

He said however, it was too early to gauge market share.

"Our distributors in both markets have a strong market position and a great track record," he said.

Responding to the reliability of supply for its export operations in the event another hurricane strikes, Simmonds said the bananas were reaped on a weekly basis, and that the company had diversified production outside.

JP's snack food factory in Annotto Bay, St. Mary reopened in April, having been closed temporarily after Hurricane Dean.

The company also said it would be launching a new ad campaign and has appointed Kirk Distributors to handle distribution to local supermarkets.

Simmonds also indicated that JP was testing cassava chips in key retail outlets and would formally launch the product later this year.

Susan Gordon
Jamaica Gleaner

Thursday, June 12, 2008

Region forced to chose between inflation and growth

Published: Thursday June 12, 2008

Some countries choose to surrender growth and employment for inflation, said Desmond Thomas, senior country economist with the Inter-American Development Bank (IDB).

He asked whether a country should give up growth and employment for inflation.

“For some countries, the answer is, ‘yes.’ In some other countries, the answer is, ‘no.’”

He spoke of the international credit ratings agency, Fitch Ratings Ltd, which has expressed concern about Suriname’s inflation rate, as the country is growing at seven per cent per annum.

“The bad news comes with some good news,” Thomas said. “And that makes it more complicated to address. It is a question of priorities.”

Thomas suggested that country officials should pay attention to basic macro-economic management.

Energy, inflation in

the Caribbean

Thomas said while there is a problem of energy prices, they are not directly hitting the region.

He said inflation across the region is reasonable, but the experiences of different countries are not the same.

“So it is really hard to generalise across this region about what is driving inflation.”

Carl Ross, managing director, Oppenheimer and Co, Inc, a full-service investment firm, said the ability of regional central banks to fight inflation with monetary policies is very limited.

Ross said inflation in the Caribbean is a demand-side phenomenon and that some inflation in the Caribbean is coming from such domestic factors as building construction.

Ross said it was “shocking” to him that there isn’t more investment in agriculture, given high food prices.

He said there are numerous barriers to entry in the agriculture sector, but figuring out how to get credit to the agriculture sector and how to de-regulate the agriculture sector so farmers can grow more food, are a start.

Ross also said he could not understand why the region was not taking “the global lead” in alternative energy.

Gervase Warner, executive chairman, Neal and Massy Energy Ltd, said oil prices are racing through the economies of Barbados, Jamaica, and Grenada, so much so that some are embracing such new policies as Venezuela’s Petrovesa and PetroCaribe, which he described as “a crazy policy” that’s “hugely unsustainable.”

Source: Trinidad Guardian Newspapers

Bajan PM issues oil warning

Published: Thursday June 12, 2008

Barbadian Prime Minister David Thompson warned yesterday that higher oil prices could spell doom for Caribbean islands.

"We cannot ignore the fact that oil represents a significant portion of the import bill of Caribbean oil importing countries and as prices continue to increase, more and more of the economic wealth of these countries will be shifted to the oil producing countries," he said.

He said if the trend continues, its likely that the balance of payments position of most of the affected economies will be pushed further into an adverse position.

Thompson made the comments during his opening address, 'Meeting the rising cost of living' at the launch of the 2008 Euromoney Latin Finance conference at the Hyatt Regency Trinidad hotel, 1 Dock Road, Port-of-Spain, yesterday.

Caribbean islands have tried to buffer the high oil prices by joining Venezuelan President Hugo Chavez’ PetroCaribe facility under which Venezuela supplies oil at preferred prices, deferring part of the payment.

Thompson called for Caricom to seriously consider implementing a common energy policy. He said Caricom countries remain heavily dependent upon petroleum as a primary source of energy.

"Four years ago, countries in the Caribbean region were consuming as much as 2.6 quadrillion British thermal units (BTUs) of total energy, with petroleum accounting for 77 per cent. This has increased dramatically.

"In 2007 alone, Barbados spent a total of about US$208 million on oil imports, representing some 7 per cent of gross domestic product (GDP) at factor cost. It is now being projected that Barbados' import bill for 2007 will be in the vicinity of US$275 million," he said.

He warned that the "devastating effect" that the trend can have on Caribbean oil importing countries should not be taken lightly.

"We only have to observe the negative impact that it is currently having on the cost of doing business in our respective countries," he said.

Source: Trinidad Guardian Newspapers