• The Bahamas is looking to save $59Mn per year via a $200Mn guarantee from the Inter-American Development Bank (IDB) to underwrite a proposed foreign currency bond issue. 
• The IDB’s $200Mn guarantee was linked to The Bahamas’ efforts to make the necessary reforms that would unleash the so-called Blue Economy as a key component of its post-COVID revival. According to the IDB, “the sovereign guarantee structure will provide important economic and financial benefits to the Government of the Bahamas.” 
• The expected savings for The Bahamas using the IDB sovereign guarantee (compared with a scenario of using a standalone non-guaranteed bond) is estimated at 96 basis points, which implies annual savings of $59Mn in net present value terms. 
• Such savings would equate to an interest coupon that would be almost one percentage point higher than without the IDB’s sovereign guarantee. The maximum guaranteed amount will be up to $200Mn to be financed from the ordinary capital resources of the IDB. 
• This financial structure could generate a superior combination of resource mobilisation, and cost reduction for the Bahamas’ Government.

(Source: The Tribune)

• U.S. investors are snapping up funds that invest in dividend-paying stocks as they search for stable income from alternatives to bond markets, which are being roiled by the prospect of rate rises. According to Refinitiv Lipper, investors bought $6.9Bn in U.S. dividend funds in January, the highest net purchases since October 2006. The Schwab US Dividend Equity ETF and SPDR S&P Dividend ETF led inflows, receiving about $1.7Bn each last month, while First Trust Rising Dividend Achievers ETF obtained $1.0Bn. 
• There has been elevated volatility in global equity markets this year on concerns over higher yields and inflation levels, which tend to squeeze corporate profit margins. Dividend funds are seen as safe and offering some stability in that scenario, as they hold well-established companies that have better pricing power and a track record of providing stable income. 
• Dividend funds' higher inflows were also due to the recent investor shift towards what is called value stocks, and away from the growth stocks, the latter referring to equities with higher potential which had outperformed during the initial rapid recovery from the coronavirus pandemic. 
• Economists predict moderate growth this year, prompting investors to look back at stocks trading at affordable levels, or value stocks, which often also offer higher dividends. Sectors such as energy and banks, which have high dividend yields, are expected to enjoy revenue growth this year, benefitting from higher interest rates and inflation levels.

(Source: Reuters)

• British households are facing the worst cost of living crisis for decades, as soaring inflation, declining real wages and an energy crisis eats into household incomes. 
• Inflation in the U.K. has soared to levels not seen for decades, with the latest reading hitting an annual 5.4% for December, the highest it has been since March 1992. 
• Welfare payments that are linked to inflation will increase by 3.1% in April, the government announced this month, in line with the Consumer Prices Index reading from September 2021. State pensions will also be increased by 3.1%. 
• The latest official data showed that average earnings, when adjusted to account for inflation, fell by around 1.0% in November from a year earlier, the first decline in wages since the height of the coronavirus pandemic. 
• Meanwhile, taxes on earned income are set to increase by 1.25 percentage points from April to help fund health and social care costs. It’s a move that Prime Minister Boris Johnson is reported to be pushing ahead with, despite pressure to U-turn from lawmakers within his party. 
• Last Thursday saw Ofgem, the regulator for the U.K. energy sector, raise its energy price cap by 54%, meaning millions of households’ annual energy bills will increase by around £700 from April. Given the U.K.’s reliance on natural gas as an energy source, the country has been hit particularly hard by a gas shortage that pushed wholesale prices up to record highs across Europe last year.

(Source: CNBC News)

• QWI Investments Limited reported a net profit of $83.04Mn (EPS $0.06) for its first quarter ending December 31, 2021, a 9.5% decline the same period last year. 
• The lower outturn was influenced by a $14.4% reduction in gains from investments. QWI's investment portfolio has high exposure to Jamaica equities (75% of its total portfolio). Throughout QWI’s first quarter the Jamaican stock market declined, which resulted in lower stock prices, and subsequently, adversely affected the company’s topline. However, looking at the company’s top five Jamaican stock holdings, which includes only main market stocks, only Caribbean Cement experienced a significant decline during the quarter. 
• Earnings were also eroded by a surge in administrative expenses surged from $10.62Mn to $32.32Mn due to increased insurance and investment management expenses. Of note that no fees were incurred in Q1 FY 2020-21 for the services of the Investment Committee.
• QWI’s stock price has declined by 1.59% since the start of the calendar year. The stock closed Tuesday’s trading session at $0.87 and currently trades at a 42% discount to its net asset value (NAV). The most recent NAV per share was $ 1.50 as of January 28, 2022.

 (Sources: Company Financials and JSE)

• Structural weaknesses in Jamaica's economy are reflected in Fitch’s Short-Term Economic Risk Index (STERI) score of 53.1. This puts Jamaica in the bottom half of the 26 Caribbean countries for which Fitch compiled STERI scores. 
• Investment policy has been poorly targeted and inefficient, presenting a headwind to economic growth, while vulnerability to external shocks, coupled with historically high levels of borrowing, has spurred two sovereign debt defaults since 2010. 
• While the government has already greatly improved the situation under International Monetary Fund guidance, further progress is needed says, Fitch. In the short term, Jamaica faces a slow rebound as the tourism industry continues to regain momentum. The downturn in the sector has weakened US dollar inflows, exerting downward pressure on the value of the Jamaican dollar.

(Source: Fitch Solutions)

• The Minister of Tourism, David Collado, revealed that in January 2022, 530,956 non-residents arrived in the country, 129% more than the previous year, of which 82% were of Dominican origin. Despite the cancellation of flights from the United States to the Dominican Republic due to snowstorms that affected the US East Coast, non-resident arrivals remained above half a million tourists. 
• Collado explained that these indicators show that the country continues to lead the arrival of tourists in the Caribbean; however, the outbreak of the omicron variant and the subsequent tightening of mobility restrictions resulted in fewer Canadian visitors for the country. Non-resident visitors from the rest of the world, excluding the United States and Canada, registered an all-time high of 245,301. 
• Amidst the pandemic, this significant tourism growth may lead to major gains in tourism sector earnings and economic growth by enhancing employment opportunities and fiscal revenues. In terms of employment, this should improve in local communities supporting growth in disposable incomes and socio-economic conditions, which could lead to an improved standard of living.

 (Source: Dominican Today)

• For the last three weeks, The Bahamas has seen a persistent downward trend in the number of Covid-19 cases and hospitalization. However, the Director of the National HIV/AIDS and Infectious Disease Programme, Dr. Nikkiah Forbes cautioned that while this is the case, the behavior of the public will determine whether the trend continues. Consequently, the course of the virus will be very dependent on what is done individually and collectively, the health system, and support for mitigating COVID. 
• Forbes explained that the trend is not cause for complacency as the behavior of the public could still impact the caseload. She pointed out that the spike in infections in early January correlated with the increased social activities and travel over the holiday season — two weeks following the season. 
• The Bahamas, like several other Caribbean countries in the region, has yet to reach a 50% vaccination rate among its population. As of Saturday, 159,839 people had been fully vaccinated in The Bahamas representing around 49% of those eligible to be vaccinated.

 (Source: Eye Witness News)

• The Commerce Department said on Tuesday that the trade deficit increased 27.0% last year to an all-time high of $859.1Bn. The deficit was at $676.7Bn in 2020. Chief economist at FWDBONDS in New York has said that the US trade picture won’t return to normal until the pandemic purchases start to slow and life returns to what it was. 
• The trade gap represented 3.7% of gross domestic product, up from 3.2% in 2020. The economy grew 5.7% in 2021, the strongest since 1984 after the government provided nearly $6.0Tn in pandemic relief, which fueled consumer spending on goods. 
• The goods deficit shot up 18.3% to a record $1.1Tn last year. Imports of goods hit an all-time high of $1.8Tn. They were driven by imports of industrial supplies and materials, which increased to their highest level since 2014. Food imports were the highest on record as were those of capital, consumer, and other goods. There were record imports from 70 countries in 2021, led by Mexico, Canada, and Germany. 
• Robust import growth overshadowed a sharp rebound in exports. Goods exports surged 23.3% to a record $1.8Tn. Exports of industrial supplies and materials, foods, consumer goods, other goods, and petroleum were the highest on record. 
• The United States logged record exports to 57 countries last year, led by led by Mexico, which increased to $276.5Bn. Shipments to China rose to $151.1Bn, while exports to South Korea increased to $65.8Bn.

(Source: CNBC News)

• Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially. Total U.S. consumer debt at the end of the year came to $15.6Tn, a year-over-year jump of $333.0Bn during the fourth quarter and just over $1.0Tn for the full year, according to data released Tuesday from the Federal Reserve’s New York district. 
• The quarterly rise was the biggest since 2007, and the annual gain was the largest ever in records going back to 2003. 
• The news comes ahead of a period in which the Fed is expected to start jacking up interest rates as it looks to tamp down inflation, which is running at its fastest pace in nearly 40 years. Markets expect the central bank to start increasing rates in March, the first of at least five bump-ups this year, totaling 1.25 percentage points. 
• Fed interest moves are directly tied to the prime rate that consumers pay for many forms of debt, including credit cards and adjustable-rate mortgages. A large chunk of the debt-load increase came from mortgages, which saw balances rise by $890.0Bn for the year and $258.0Bn in the fourth quarter, to nearly $11.0Tn. Mortgage originations for the year totaled more than $4.5Tn, a new record. Credit card balances increased by $52.0Bn in the final three months of the year, a new quarterly record that brought total debt in that category to $860.0Bn. 
• Owing to the rapid gain in prices, auto-loan balances rose by $90.0Bn, or 6.6%, to $1.46Tn. New auto prices rose 11.8% for the year while prices for used vehicles soared by 37.3%, according to Labor Department data. 
• One area that saw little increase was student loans, which edged higher by just $20.0Bn for the year and declined marginally in the fourth quarter. Forbearance programmes, though mostly expired, are still keeping balances and delinquencies in check. 
• The rising-rate environment could affect household cash flows as borrowers adjust. Those who locked in at low mortgage rates, for instance, are likely to be reluctant to go out and buy new homes with rates moving higher, while those who ran up credit card balances could be constrained as financing costs increase.

(Source: CNBC News)

• For its first quarter ending December 31, 2021, SALF reported net profit attributable to shareholders of $41.92Mn, a 219.9% ($28.82Mn) increase relative to the corresponding period last year. 
• Bottom-line growth was supported by a higher revenue outturn. Revenues increased by 27.8% or $62.99Mn for Q1 driven by strong domestic and export sales across its range of products. Though direct expenses increased by 16.9%, gross margin improved by 6.3 percentage points as revenue growth outpaced the growth in direct expenses. 
• Sales and promotional expenses increased by 32.4% as the company ramped up targeted marketing activities for key consumer groups. Additionally, the company saw a 12.7% increase in admin expenses.  Against this background, operating profit for the quarter increased by 162.1% to $43.16Mn from $16.47Mn. 
• Net finance income saw a 916.1% increase which was mainly supported by an increase in foreign exchange gains which, also contributed to the company’s bottom line. 
• SALF stock price has risen 3.81% since the start of the calendar year. The stock closed Monday’s trading session at $6.86 and currently trades at a P/E of 38.1x earnings, which is above the  Main Market Distribution & Manufacturing sector average of 19.1x.

(Sources: JSE and Company Financials)