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Jamaica companies being downgraded over government debt swap deal
Edited by : AL CIRCLE
2 min read
The New York-based Fitch Ratings agency announced today that it had downgraded the Clarendon Alumina Production Ltd's ratings on the basis of the Jamaica government debt exchange, which closes today.
This follows announcements made last week by international insurance rating agency A.M Best that it had downgraded Sagicor Life of Jamaica and placed the entire Sagicor Life group under review due to its exposure to Jamaican government securities in its portfolios. The Caribbean’s only credit rating agency, CariCRIS also announced last week that it had placed a whole host of publicly rated entities in Jamaica under a ratings watch. Along with Sagicor’s Jamaica subsidiaries, CariCRIS also identified the National Commercial Bank of Jamaica, NCB Capital Markets Ltd, and the Development Bank of Jamaica Ltd as being under review for creditworthiness in light of the exchange.
According to Fitch, it has downgraded Clarendon Alumina Production’s long-term foreign currency Issuer Default Rating (IDR) to 'CCC' from 'B-'; its local currency long-term IDR to 'CCC' from 'B-'; and its US $200 million 8.5% unsecured notes issue due November 2021 to 'CCC/RR4' from 'B-/RR4'. However, it has removed the company’s negative outlook.
Clarendon Alumina is the holding company for the government of Jamaica's 45% ownership in a joint venture with a subsidiary of Alcoa called Jamalco, which is a bauxite mining and alumina refining operation in Jamaica. Fitch explained that the company’s ratings are directly linked to those of Jamaica. The unsecured notes are supported by an explicit unconditional and irrevocable guarantee by the Government of Jamaica for the timely payment of interest and principal.
Therefore, the downgrade of the company’s ratings to 'CCC' follow the downgrade of Jamaica's international senior unsecured debt instruments to 'CCC' from 'B-'and long-term FC and LC IDR's to 'C' from 'B-' on Feb. 12, 2013.
Fitch said the company’s ratings mirror the ratings for Jamaica's international bonds because an unsuccessful debt exchange could result in increased financing pressures for the sovereign.
This follows announcements made last week by international insurance rating agency A.M Best that it had downgraded Sagicor Life of Jamaica and placed the entire Sagicor Life group under review due to its exposure to Jamaican government securities in its portfolios. The Caribbean’s only credit rating agency, CariCRIS also announced last week that it had placed a whole host of publicly rated entities in Jamaica under a ratings watch. Along with Sagicor’s Jamaica subsidiaries, CariCRIS also identified the National Commercial Bank of Jamaica, NCB Capital Markets Ltd, and the Development Bank of Jamaica Ltd as being under review for creditworthiness in light of the exchange.
According to Fitch, it has downgraded Clarendon Alumina Production’s long-term foreign currency Issuer Default Rating (IDR) to 'CCC' from 'B-'; its local currency long-term IDR to 'CCC' from 'B-'; and its US $200 million 8.5% unsecured notes issue due November 2021 to 'CCC/RR4' from 'B-/RR4'. However, it has removed the company’s negative outlook.
Clarendon Alumina is the holding company for the government of Jamaica's 45% ownership in a joint venture with a subsidiary of Alcoa called Jamalco, which is a bauxite mining and alumina refining operation in Jamaica. Fitch explained that the company’s ratings are directly linked to those of Jamaica. The unsecured notes are supported by an explicit unconditional and irrevocable guarantee by the Government of Jamaica for the timely payment of interest and principal.
Therefore, the downgrade of the company’s ratings to 'CCC' follow the downgrade of Jamaica's international senior unsecured debt instruments to 'CCC' from 'B-'and long-term FC and LC IDR's to 'C' from 'B-' on Feb. 12, 2013.
Fitch said the company’s ratings mirror the ratings for Jamaica's international bonds because an unsuccessful debt exchange could result in increased financing pressures for the sovereign.
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