PriceSmart Taps Jamaican and Trinidadian Markets to Raise US$65M Amid Forex Crunch in T&T

By BATV News Desk

PriceSmart Inc., the membership warehouse club operator across Latin America and the Caribbean, is navigating a persistent foreign exchange (forex) liquidity crisis in Trinidad & Tobago (T&T) by tapping both Jamaican capital markets and Trinidadian banking institutions to raise up to US$65 million. The funds are intended to finance a new distribution centre and settle outstanding payables.

Strategic Financing Amid Forex Constraints

The developments were disclosed in PriceSmart’s third-quarter financial report for the period ending May 31, 2025. PriceSmart’s Trinidadian affiliate, PSMT Trinidad/Tobago Limited (PSMT TT), has engaged GK Capital Management Ltd, a Jamaican investment firm, to arrange a US$16 million bond issuance. The bond will be denominated in Jamaican dollars but indexed to the U.S. dollar, a strategic move allowing PriceSmart to mitigate currency exposure while attracting Caribbean-based investors.

The bond carries a 7.25% interest rate and a four-year tenure, with the potential for an additional US$13.5 million equivalent issuance under similar terms. To back the facility, PSMT TT will pledge an asset pool equal to 1.05 times the principal amount—or approximately US$16.8 million—in a money market mutual fund at Trinidad & Tobago Unit Trust Corporation (TTUTC) or an alternative approved institution. A sinking fund with a minimum of US$1.875 million will be maintained with GK Capital to ensure repayment discipline.

Backing the bond is a corporate guarantee from PriceSmart’s Jamaican subsidiary, PriceSmart Jamaica Ltd, further bolstering investor confidence.

Layered Debt Strategy with Syndicated Loans

In a parallel financing strategy, another PriceSmart subsidiary in Trinidad will secure a cash-secured syndicated loan facility totaling US$20.5 million, divided into US$15 million in U.S. dollars and the remainder in Jamaican dollar equivalents. Like the bond, this loan is also indexed to USD and bears an identical 7.25% interest rate with a four-year maturity.

Additionally, a three-year term loan of US$15 million—denominated in U.S. dollars but indexed to the Trinidad & Tobago dollar (TTD)—has been finalized. This loan comes with a higher interest rate of 11.5% and will be repaid in TTD.

Addressing Liquidity Gaps and Long-Term Investment Goals

In its quarterly statement, PriceSmart highlighted that the forex illiquidity in T&T has made it increasingly difficult to access sufficient U.S. dollars for daily operations. The company explained:

“In July 2025, the company entered into the following financing transactions, which we expect to fund in the fourth quarter of fiscal year 2025, to provide our Trinidad subsidiary with additional U.S. dollar liquidity needed to meet its operational needs and help reduce the shortfall in U.S. dollar sourcing due to continued illiquid foreign exchange conditions in that market.”

To date, PriceSmart’s Trinidad subsidiaries have borrowed a cumulative US$23 million from local and regional financial institutions since 2021, including CIBC Caribbean Bank (Trinidad & Tobago), as a means of navigating the forex shortages.

As of May 31, 2025, the company held US$73.9 million in TTD-denominated cash and short-term investments—funds that cannot be readily converted to USD. This figure is up from US$60.2 million in August 2024 but still significantly below the peak of US$100.5 million in November 2020.

Distribution Centre and Expansion Plans

Despite the cash flow limitations, PriceSmart remains committed to expanding its footprint in the region. In addition to the remodelling of its Port of Spain club, which was completed in August 2024, the company is pushing forward with plans to construct distribution centres in Guatemala, Trinidad, and the Dominican Republic during its 2026 fiscal year, which begins on September 1, 2025.

PriceSmart currently operates four warehouse clubs in Trinidad, making the country a critical hub for its Caribbean operations. The forthcoming distribution centre in Trinidad is expected to enhance supply chain efficiency and reduce logistics costs—an especially important consideration as the company contends with capital restrictions and currency conversion limitations.

Conclusion

PriceSmart’s multi-layered financial maneuvering underscores the growing reliance on regional financial instruments and cross-border funding structures by multinational firms operating in forex-constrained markets. By leveraging both Jamaican and Trinidadian capital ecosystems, the retailer is not only shoring up liquidity but also laying the groundwork for long-term operational resilience in one of its most strategically important Caribbean markets.

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