Caribbean News Now!

About Us Contact Us

Countries/Territories

Jump to your country or territory of interest

Advertise with us

Reach our daily visitors from around the Caribbean and throughout the world. Click here for rates and placements.

Contribute

Submit news and opinion for publication

Subscribe

Click here to receive our daily regional news headlines by email.

Archives

Click here to browse our extensive archives going back to 2004

Also, for the convenience of our readers and the online community generally, we have reproduced the complete Caribbean Net News archives from 2004 to 2010 here.

Climate Change Watch

The Caribbean is especially vulnerable to rising sea levels brought about by global warming. Read the latest news and information here...

Travel


Follow Caribbean News Now on Twitter
Connect with Caribbean News Now on Linkedin



News from the Caribbean:


Back To Today's News

CDB credit rating cut
Published on December 15, 2012 Email To Friend    Print Version

NEW YORK, USA -- Standard & Poor's Ratings Services this week lowered its long-term foreign currency issuer credit rating on Caribbean Development Bank (CDB) to 'AA' from 'AA+'. The outlook is negative. The agency also affirmed its 'A-1+' short-term foreign currency rating on CDB.

"The development bank's strong business profile is anchored by its role as a prominent lender to Caribbean governments and its historical capacity to lend countercyclically through the credit cycle in support of its public policy mandate," said Standard & Poor's credit analyst Kelli Bissett.

Periodic capital increases -- the most recent of which is planned to increase CDB's paid-in capital by 138% over six years (2010-2016) -- have demonstrated shareholder support. Most major and extra-regional shareholders have begun to pay in their subscriptions on time, although 28% of anticipated subscription payments for the first two years are pending because of administrative and parliamentary delays.

"CDB's strong business profile has elements that are weaker than those of higher-rated peers," said Bissett.

Although most borrowing members traditionally have treated CDB as a preferred creditor, one government borrower is more than 180 days in arrears to CDB on interest and principal, while the government has paid its commercial debt. By its policy, the bank has halted disbursements to this borrower in arrears, and a late interest penalty is accruing on the arrears.

Preferred creditor treatment is an important element in Standard & Poor's assessment because it speaks to CDB's membership support, capital adequacy, and the agency’s expectation of loss given default. CDB's exposure to the government borrower more than 180 days past due is 3% of loans and 5% of adjusted common equity (net of receivables from members).

"CDB's capitalization is the cornerstone of its very strong financial profile," said Bissett.

Standard & Poor's has adopted a risk-adjusted capital framework to analyze MLIs' capital adequacy. CDB's basic risk-adjusted capital (RAC) ratio was 34% as of year-end 2011. After taking into account concentration exposure to sovereign governments and other MLI-specific adjustments, the RAC ratio declines to 21%, which is higher than that of many other MLIs but appropriate given CDB's operational risks.

Standard & Poor's concentration adjustment to the RAC ratio reflects CDB's largest loan exposures to Jamaica (24% of loans), Barbados (12%), St Vincent and the Grenadines (10%), St Lucia (9%) and Belize (7%). These top-five borrowers remain current on their obligations to the bank.

"The negative outlook reflects embedded credit risks in CDB's loan portfolio," said Bissett. "Our view of the treatment of CDB as a preferred creditor by its borrowing member shareholders, which is established by practice, is a pivotal component of this analysis."

Standard & Poor's could lower its ratings on CDB if the government borrower more than 180 days in arrears does not clear its arrears with CDB, if other member governments fall more than 180 days past due, or if (contrary to expectation) the bank's funding conditions or liquidity weaken. The ratings could stabilize at current levels if the public-sector loan performance improves and if member capital contributions comply with scheduled payments.
 
Reads: 2708





Click here to receive daily news headlines from Caribbean News Now!



Back...

Comments:

No comments on this topic yet. Be the first one to submit a comment.

Back...

Send us your comments!  

Send us your comments on this article. All fields are required.

For your contribution to reach us, you must (a) provide a valid e-mail address and (b) click on the validation link that will be sent to the e-mail address you provide.  If the address is not valid or you don't click on the validation link, we will never see it!

Your Name:

Your Email:

(Validation required)

Comments:
Enter Code



Please note that, if you are using an AT&T domain email address, e.g. att.net, bellsouth.net, sbcglobal.net, the verification email will likely not be delivered. This is outside of our control and the only remedy seems to be for readers to complain to AT&T





Disclaimer
User comments posted on this website are the sole views and opinions of the comment author and are not representative of Caribbean News Now or its staff. Caribbean News Now accepts no liability and will not be held accountable for user comments.
Caribbean News Now reserves the right to remove, edit or censor any comments. Any content that is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will not be approved.
Before posting, please refer to our Terms of Use and Privacy Policy.

The Caribbean Writer 2014


Other Headlines:



Regional Sports: