Standard & Poor’s, Fitch Downgrade Jamaica Credit Rating

By: Caribbean Journal Staff - February 13, 2013

Above: Kingston (CJ Photo)

By the Caribbean Journal staff

Standard & Poor’s and Fitch have each downgraded Jamaica’s sovereign credit rating following the country’s announcement of a debt exchange offer on Monday night.

The moves came after Jamaica announced a domestic debt exchange offer valued at $9.1 billion USD ahead of the country’s potential deal with the International Monetary Fund.

S&P lowered its rating on Jamaica’s foreign and local currency sovereign credit ratings to “SD” from “B-/B.”

The firm also lowered the ratings on government securities not included in the debt exchange offer to “CCC.”

The offer “includes foreign currency-denominated debt that was issued locally, which carries foreign currency ratings, which is why we have lowered the foreign currency credit rating to ‘SD,'” S&P said in a statement.

Fitch downgraded the firm’s long-term foreign currency and local currency issuer default ratings to “C” from “B-,” and lowered its short-term foreign currency rating to “C” from “B.”

“In Fitch’s opinion, the exchange, if completed, would constitute a ‘distressed debt exchange’ (DDE) in line with its criteria, as the operation adversely impacts the original contractual terms of domestic bondholders,” the firm said.

Fitch said both ratings moves indicated that “default on both types of debt instruments is highly likely in the near term.”

“Fitch considers that Jamaica’s proposed domestic debt exchange will, if completed, constitute a default,” it said. “Hence, the sovereign’s FC and LC IDRs will be lowered to ‘Restricted Default’ (RD) upon completion of the exchange. The government plans to close the exchange on Feb. 21, 2013.”

S&P said the debt exchange is considered a default for two reasons: one, that the offer implies that “investors will receive less value than promised as per the original securities,” and two, that the firm views the offer as “distressed rather than opportunistic because the issuer does not intend to fulfill its original obligations.”

Jamaican last undertook a debt exchange offer in January 2010, when S&P also lowered its credit rating to “SD.”

S&P firm said it expected to assign a new credit rating in the “CCC” category to the new bonds upon the completion of the debt exchange and the issuance of the new bonds, which is set for later this month.

Fitch said that “Jamaica’s ratings would be raised out of default “shortly after Fitch determines that the exchange has been successful, which is typically measured by a minimum participation rate of 90 percent.”

Despite the debt exchange, Jamaica’s general government debt burden will “remain high,” S&P said, at 115 percent of GDP in 2013.

Popular Posts the sexiest beaches including this resort at atlantis

The Sexiest Beaches in the Caribbean to Visit Right Now 

One is a beach with a nightclub-style pool right next door. Another is filled with beach bars — and even has its own au natural corner. Then there’s a beach that’s practically a nonstop party.  There are so many things that […]

The Best Caribbean Islands to Visit This Summer, From Antigua to St Croix

verandah antigua

We’ve been saying it for years, and we’ll keep saying it: in some ways, the Caribbean is even better in the summer months. The water is warm. It’s a bit less crowded, a little bit quieter. At night, the trade […]

The Winners of the 2024 Caribbean Green Awards 

caribbean green

With almost 20,000 votes, the winners of the Caribbean Green Awards 2024 Presented by E-Finity have been crowned.  From state-of-the-art marine conservation projects to hotels that are redefining sustainability, the Green movement has never been stronger in the Caribbean.  “This […]

Related Posts jamaica tourism

Spanish Hotel Groups Investing $2 Billion in New Jamaica Projects

Spanish hotel companies are investing $2 billion more in Jamaica, according to Jamaica Tourism Minister Edmund Bartlett.  Bartlett says the government has concluded talks with three major Spanish hotel giants for projects beginning this year.  That will include new luxury […]

Caribbean Photo of the Week: Black River, Jamaica

jamaica photo caribbean black river

The latest Caribbean Photo comes from Caribbean Journal reader Lloyd Linton, who sent in this lovely shot of the Black River in Jamaica. Have you taken a great photo in the Caribbean? Send it to with CPOTW in the subject […]

Jamaica Is Hosting Another Tourism “Resilience” Conference 

jamaica minister speaking to delegates ahead of conference

Jamaica has been working to position itself as a global center for the study and practice of tourism “resilience.” That included the creation of the first global tourism resilience center and, last year in Kingston, the first-ever Global Tourism Resilience […]


Sign up for Caribbean Journal's free newsletter for a daily dose of beaches, hotels, rum and the best Caribbean travel information on the net.

No. Thank You