S&P Affirms Montserrat Credit Rating; Outlook Remains “Stable”

By the Caribbean Journal staff

Standard & Poor’s this week affirmed Montserrat’s “BBB-/A-3” sovereign issuer credit rating, while also affirming its “BBB-” transfer and convertibility assessment.

Monterrat’s outlook remains “stable,” according to the ratings firm.

The rating reflected “the UK’s strong institutional and budgetary support of the island, according to credit analyst Kelli Bissett.

The UK’s Department for International Development, along with the European Union, contribute more than 50 percent of Montserrat’s GDP in grants for budget support and infrastructure investment, according to the firm.

S&P said that Montserrat’s national political agenda was focused on the planned new port at Carr’s Bay, along with a new town centre and tourism hospitality services at Little Bay.

But it said it expected that construction of the Carr’s Bay port breakwall and jetty would not begin until 2013, due to unannounced public concession contracts.

“We expect these implementation delays of the port and Little Bay development will contribute to subdued 2 percent economic growth through this year and for 2013 and moderate 2.5 percent over the period,” the firm said.

The “stable” outlook was the result of S&P’s expectation that the UK and EU’s support would continue through the medium term and the foreseeable future.

“We could raise the ratings if the government makes significant progress on its infrastructure projects, which could improve growth prospects,” Bissett said. “We could lower the rating if UK financial support declines before the island economy is able to generate higher fiscal revenues on its own.”