NEW YORK, United States, February 27, 2014, CMC – International credit rating agency, Fitch, has upgraded Jamaica’s credit rating after the country completed its debt exchange Thursday.
The agency lifted Jamaica’s long-term foreign currency issuer default ratings to triple-C, seven notches into junk territory, from restricted default .
According to the Wall Street Journal, the upgrade concludes Fitch’s assessment of the country’s domestic debt exchange offer launched on February 12.
“The ratings firm considered the operation a distressed debt exchange as the swap hurts the original contractual terms of domestic bondholders,” the paper said.
On Tuesday, a Jamaica government statement issued said Fitch Ratings upgraded the island’s long term foreign currency and local currency Issuer Default Ratings (IDR) to “B-“ from “CCC.”
The rating agency also raised the short-term foreign currency rating from “C” to “B” and the Country Ceiling from “B-“ to “B”, the statement said. The outlook was also upgraded to “Stable”.
The statement said the ratings were supported by reduced financing risks due to fiscal consolidation and the lengthening of domestic debt repayments; the successful completion of two reviews under the International Monetary Fund (IMF) program and the satisfaction of all the quantitative targets and structural benchmarks for the third review; and the preservation of broad macroeconomic and financial stability.
In addition, Fitch said the declining path of Jamaica’s public debt/Gross Domestic Product (GDP) due to the National Debt Exchange executed in February 2013 coupled with an increase in primary surpluses and modest economic recovery contributed to the rating upgrade.
Fitch also said access to multilateral funding, which has eased external financing constraints, is another factor in the rating lift.
“The Government welcomes the positive rating action of Fitch Ratings and is committed to continuous improvement in Jamaica’s fiscal and debt operations, thereby facilitating further economic recovery and positive growth,” said the Jamaica government statement.
Moody’s Investors Service is also currently reviewing Jamaica’s rating for a “possible downgrade after news of the debt exchange broke,” according to the Wall Street Journal. The firm rates the country at B3, one notch above that assigned by Fitch.