Above: Kingston (CJ Photo)

By the Caribbean Journal staff

Following a similar move by Fitch last week, Standard & Poor’s has raised Jamaica’s foreign and local currency sovereign credit ratings to “CCC+” and out of default.

The move came after the completion of Jamaica’s debt restructuring, known as NDX.

The firm also raised its short-term foreign and local currency sovereign credit ratings to “C” from “SD” and said the country’s outlook was “stable.”

S&P will assign its “CCC+” rating to Jamaica’s new benchmark bonds, issued at the conclusion of the debt exchange.

The new rating will reflect S&P’s “assessment of the government’s continued vulnerability to adverse external shocks, its low level of international reserves, and the
risks to a successful implementation of its reform program in conjunction with assistance from the International Monetary Fund.

The firm said the failure of a 2010 domestic debt exchange (JDX) to achieve sustainable debt reduction “highlights the difficulties facing Jamaica.”

“The ratings on Jamaica reflect the government’s still high debt burden, offset somewhat by its improved amortization and cost profile in the short term,” said Standard & Poor’s credit analyst Joydeep Mukherji in a statement.

Jamaica’s debt exchange, launched Feb. 12, affected just under half of the country’s total public debt.

The exchange did not reduce the stock of the government’s debt, but it did lengthen the maturity of locally issued debt by five years on average and lowered the coupon as well.

The New York-based ratings firm said it expected the pace of recovery in Jamaica’s economy to be slow, with the potential to grow 1 percent to 2 percent this year.

S&P said its stable outlook reflected the view that the government’s ability to improve its financial position “has strengthened” following the debt deal.