THE BANK of Jamaica (BoJ) says it will offer another special two-year variable-rate (VR) bond to primary dealers and commercial banks, over the period June 19-22, to pull excess cash from the money market system.

"This offer is being made in the context of the exceptionally high levels of Jamaica dollar liquidity expected during the offer period," said the BoJ, Jamaica's central bank.

At least two Treasury bills, with combined principals of $900 million are to be redeemed on Friday, June 22.

A $116 million LRS is due a week later on June 28. These follow the June 15 redemption of a $798 million investment debenture.

The U.S. dollar market is also expected to be awash with US$33 million (J$2.2 billion) of flows from an indexed bond that becomes due June 20.

The central bank last auctioned a similar one-year special bond in January, with overwhelming demand forcing the extension of the one-day subscription period.

The new issue will be an added tool, to back the usual 30- to 90-day certificates of deposit that the bank trades with its dealers.

The initial coupon on the new VR bond will be at 11.8 per cent, with interest thereafter to be calculated at the prevailing 90-day Treasury bill rate plus a reset of 1.25 per cent.

Repayment will be amortised in two equal tranches in 2008 and 2009, on June 19 of both years.

business@gleanerjm.com