JIS News

Minister of Finance and the Public Service, Hon. Audley Shaw, says reports from rating agencies, Standards & Poors and Fitch, indicate that Jamaica’s credit rating will improve to the single “B” category, soon.
This is upon successful closing of liability management transactions under the proposed public debt exchange, which forms part of Government’s debt management strategy. He noted that this was cited in both agencies’ reports, which further downgraded Jamaica after the debt exchange was launched last Thursday.
“We had always been in discussions with our three rating agencies and fully anticipated these actions. In fact, it is often considered a part of their methodology that issuers rated CCC or below be downgraded when undertaking certain types of liability management transactions,” Mr. Shaw told the House of Representatives in Kingston on Tuesday (January 19) .
“The debt exchange is aimed at securing fiscal savings, by exchanging existing high cost debt for new instruments that have lower coupons and longer maturities. It has been designed, bearing in mind the need to avoid jeopardising the stability of the financial market. A financial system support fund will also be put in place to assist financial institutions that are participating in the exchange,” he said.
Mr. Shaw also underscored the importance of having the full participation of the domestic investors in the process, if the initiative is to be successful. He thanked the financial market participants that have already rallied in support of the unprecedented move.
The overall debt management strategy will include an assessment of the cost-risk analysis of alternative portfolio options, and enhance transparency and communication with market players and rating agencies by June, 2010, he explained.
Mr. Shaw said that the Government will also seek technical assistance from the IMF to examine institutional features of the Government’s securities market in order to make it more competitive.

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