Mayberry takes advantage of bond market again

MAYBERRY Investments Limited (MIL) will once again use the Jamaica Securities Exchange (JSE) bond market to refinance a $1.374 billion tranche of its recent bond offering, with the option to increase the offering to $2.061 billion.

Mayberry Investments raised $6.39 billion in four tranches in January 2023 through a public bond offering, the first public bond offering in over six years on the JSE bond market. Since then, Mayberry Investments has arranged a $12 million public bond offering for Express Catering Limited (ECL) and a $3.38 billion bond offering for Mayberry Jamaican Equities Limited (MJE) in the first half of 2024.

The company’s latest bond offering is intended to refinance bonds that expired on July 19 and are no longer listed on the JSE bond market. Those bonds had a 10 percent interest rate and an 18-month term. The new bond will retain the same term but will have an interest rate of 10.75 percent. The proceeds from the new bond will also be used to cover approximately $45.43 million in bond-related expenses, of which $26.94 million was for marketing expenses.

The bond will be secured by a charge on a secured loan portfolio valued at $7.13 billion, relative to the underlying security on that loan portfolio, which has a market value of $18.25 billion. There is already $6.22 billion of collateral on the loan portfolio.

The offer opens on Friday and is expected to close by September 20, unless the offer closes earlier or is extended beyond the original closing date. Mayberry Investments individual clients may apply on ipo.mayberryinv.com/mi-ipo while other investors can use the sales agents Sagicor Investments Jamaica Limited or JMMB Securities Limited. The minimum subscription amount is $20,000 in increments of $10,000.

Mayberry Investments used the proceeds from the 2023 bond offering to expand its lending portfolio, with its client collateral portfolio growing 27% from $3.82 billion to $4.84 billion. It also lent $4.96 billion ($31.79 million) to MJE, expanding its investment portfolio in stocks such as Jamaica Broilers Group Limited, Dolla Financial Services Limited and NCB Financial Group Limited. MJE repaid $4.73 billion ($30.50 million) to Mayberry Investments in the first half of 2024, reducing its secured loan balance to $1.33 billion ($8.55 million).

This expanded loan portfolio from increased margin loans and bonds resulted in Mayberry Investments’ net interest income increasing 261 percent to $439.16 million. Total net interest income and other operating income increased 40 percent to $768.89 million. However, a 7 percent increase in operating expenses to $1.04 billion resulted in a net loss of $268.37 million.

Mayberry Group Limited (MGL), the ultimate parent company of Mayberry’s affiliates, saw its net interest expense nearly double to $153.88 million as interest income from MJE was eliminated in consolidation. Higher operating expenses and the share of losses from the joint venture resulted in MGL recording a net loss attributable to shareholders of $705.81 million compared to a net income attributable to shareholders of $293.34 million for the six-month period.

MGL’s total assets for the six months are up eight percent at $63.51 billion, with investment securities and investments in associates totaling $30.39 billion, while loans and other receivables totaled $14.63 billion. Cash ended the period at $4.18 billion, with net cash and cash equivalents at $2.78 billion. Total liabilities rose 15 percent to $38.98 billion following MJE’s recent bond issuance, while equity attributable to shareholders decreased two percent to $15.91 billion.

MGL declared a dividend of $0.125, totalling $150.14 million, to be paid on August 30 to shareholders of record as of August 16. Mayberry Group also approved a dividend policy with the intention to pay a quarterly dividend. MJE has not declared a dividend in 2024, and the company has been paying dividends since 2019 – a few months after listing on the JSE.

As of Monday, tranches III and IV of the 2023 MIL bond offering and three tranches of the recent MJE bond offering are the only Jamaican (JMD) bonds in the JSE bond market. The ECL US dollar (USD) bond is the only bond in the JSE USD bond market.

While the JSE Bond Market is another platform that provides publicly listed companies or their subsidiaries with the opportunity to reach a wider pool of investors and provide access to a fixed income instrument, trading on both markets is sparse. The bonds are not traded frequently by most investors, and the ECL bond recorded its first transaction on 16 August, four months after its initial listing. Tranche I and I of the MJE recorded their first transactions in the week of 9 August, while Tranche II recorded its first transaction on 19 August. This bond was listed on the JSE Bond Market on 30 July, with a listing ceremony scheduled for this week.