Mar 2009 Financial News

Government bonds downgraded

Mar 05, 2009

The international rating agency, Moody's Investor Service, yesterday downgraded its rating of Jamaica's government bond in a move which it said reflects the problems facing the country.

According to Moody's, its decision was predicated on the anticipation that Jamaica's key macroeconomic indicators would deteriorate in 2009.

Moody's moved Jamaica's foreign currency and local currency ratings for the bonds down to B2 from B1 and Ba2.

The foreign currency country ceiling for deposits was also revised downwards to B3 from B2.

All other ratings remained unchanged with the outlook on all ratings being stable.

According to Moody's, while the economic deterioration is a global phenomenon, Jamaica is particularly vulnerable as a small, very open economy.

But the rating agency noted Jamaica's proven ability to navigate through situations of high volatility, and said it expects the country to continue its strong commitment to debt servicing.

The Government has also entered into a number of arrangements with multilateral agencies, which Moody's Investors Service noted "could prove to be quite beneficial in a situation of extreme stress".

Moody's action, announced yesterday, concluded a review of Jamaica's credit risks that began in November 2008.

In the meantime, the Opposition People's National Party (PNP) has expressed regret at the decision by Moody's to downgrade the bond ratings.

"Whilst the downgrades are not totally unexpected, given the deterioration in virtually all macroeconomic indicators, this formal action is a major blow to the country's prospects of recovery in the medium term," the PNP said in a release.


Source:
Jamaica Gleaner
Thursday March 5, 2009

http://www.jamaica-gleaner.com/gleaner/20090305/business/business2.html