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NEW YORK (Standard & Poor's) Nov. 2, 2009--Standard
& Poor's Ratings Services lowered its long-term foreign and domestic currency ratings on Jamaica to 'CCC' from 'CCC+'. The outlook on the ratings is negative.
We kept the recovery rating on the senior unsecured debt at
'4' and the country transfer and convertibility (T&C) assessment at
'B'.The downgrade on Jamaica follows the resignation of Central
Bank governor Derick Latibeaudiere, who was the lead negotiator within
the framework of a possible standby facility from the International Monetary Fund (IMF). On Aug. 5, 2009, we downgraded Jamaica's domestic and foreign currency long-term ratings to 'CCC+' with a negative outlook. At that time, we highlighted the fact that Jamaica's severe fiscal situation as well as the vulnerabilities in the government's debt profile may give it incentives to renegotiate with its creditors, particularly its resident
creditors that hold the larger bulk of Jamaican debt.
"Since then, the government's room to maneuver continues to
narrow as it becomes increasingly difficult to further cut public
expenditures--as reflected, in part, in the recently amended budget--in
order to sustain an interest burden of about 60% of general government
revenue," said Standard & Poor's credit analyst Roberto Sifon Arevalo.
The negative outlook on the ratings signals the growing
risk of a debt exchange operation that could be an event of selective
default under our distress debt exchange criteria. While the government's
engagement with the IMF is a positive effort to address the long-standing
structural issues in Jamaica, recent events highlight the complexity of the
negotiation process and create more uncertainty about the timeframe for reaching an agreement with the Fund.
& Poor's Ratings Services lowered its long-term foreign and domestic currency ratings on Jamaica to 'CCC' from 'CCC+'. The outlook on the ratings is negative.
We kept the recovery rating on the senior unsecured debt at
'4' and the country transfer and convertibility (T&C) assessment at
'B'.The downgrade on Jamaica follows the resignation of Central
Bank governor Derick Latibeaudiere, who was the lead negotiator within
the framework of a possible standby facility from the International Monetary Fund (IMF). On Aug. 5, 2009, we downgraded Jamaica's domestic and foreign currency long-term ratings to 'CCC+' with a negative outlook. At that time, we highlighted the fact that Jamaica's severe fiscal situation as well as the vulnerabilities in the government's debt profile may give it incentives to renegotiate with its creditors, particularly its resident
creditors that hold the larger bulk of Jamaican debt.
"Since then, the government's room to maneuver continues to
narrow as it becomes increasingly difficult to further cut public
expenditures--as reflected, in part, in the recently amended budget--in
order to sustain an interest burden of about 60% of general government
revenue," said Standard & Poor's credit analyst Roberto Sifon Arevalo.
The negative outlook on the ratings signals the growing
risk of a debt exchange operation that could be an event of selective
default under our distress debt exchange criteria. While the government's
engagement with the IMF is a positive effort to address the long-standing
structural issues in Jamaica, recent events highlight the complexity of the
negotiation process and create more uncertainty about the timeframe for reaching an agreement with the Fund.
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