Latest News

Jamaica 'B/B' Ratings Affirmed; Outlook Revised To Positive From Stable On Improved External Position Published: 26 September 2018

  • On Sept. 25, 2018, S&P Global Ratings revised its outlook on Jamaica to positive from stable. At the same time, S&P Global Ratings affirmed its 'B' long- and short-term foreign and local currency sovereign credit ratings, and its 'B+' transfer and convertibility assessment on the country. 
  • The positive outlook reflects the at least one-in-three likelihood of an upgrade if, in the next 12 months, Jamaica further strengthens its external liquidity position while maintaining tight fiscal policy and high primary surpluses. The combination of modest GDP growth and better external liquidity, as reflected in improvement in gross external financing needs to less than 100% of current account receipts (CAR) plus usable reserves could boost the sovereign's credit rating. [S&P] expect that the government will continue to meet strict fiscal targets, and maintain its commitment to a gradual reduction in its debt and interest burdens. [S&P] also expect that the government will continue advancing toward a more effective monetary policy framework for the central bank, including a more flexible exchange rate. 
  • [S&P] could raise the ratings in the next year if Jamaica continues improving its external liquidity such that the economy becomes more resilient to potential external shocks, including possibly higher oil prices. In addition, over a longer period, sustained economic growth at higher levels would strengthen Jamaica's economic profile, potentially resulting in a higher rating.[S&P] could revise the outlook to stable during the same period if the recently improving trajectory of Jamaica's external position reverses and begins to weaken, or the government misses fiscal targets, leading to an increase in debt and interest burdens.

 Source: S&P

Rating Action: Moody's reviews Petrotrin's B1 ratings for downgrade Published: 26 September 2018

 

  • Moody's Investors Service (Moody's) placed Petroleum Co. of Trinidad & Tobago's (Petrotrin) B1 corporate family rating and senior unsecured debt ratings on review for downgrade. This rating action was based on the lack of clarity regarding Petrotrin's new business profile and strategy as well as increasing liquidity risk related to the approaching maturity of the 2019 bonds. Outlook, was also changed to ‘Rating Under Review From Stable’ 
  • Petrotrin has a weak financial condition, reflected in its high adjusted debt leverage of 6.2 times and low adjusted interest coverage of 2 times in March 2018. In addition, the government recently announced that it will close Petrotrin's refinery and the company will focus on its upstream exploration and production business. Petrotrin's new business profile and strategy is still unclear, which put to question its medium-term financial prospects. In 2017, the company's oil and gas production was 49,084 boe, which is considered small in the universe of exploration and production companies. 
  • Petrotrin also faces increased liquidity risk related to $850 million in global bonds that mature in August 2019. Petrotrin's total adjusted debt in March 2018 amounted to close to $2 billion, out of which about $600 million was short term debt. Although Moody's believes that the level of implicit government support to the stateowned company has not changed and continues to be very high, Petrotrin's weak financial condition and liquidity, combined with uncertainties regarding the viability of its business transformation, raise questions about its intrinsic credit profile. 

Source: Moody’s Investors Service

IMF Sees Trinidad Emerging From ‘Deep Recession’ This Year Published: 26 September 2018

  • IMF executive board send statement on Trinidad and Tobago by email.  Economy “slowly recovering from a deep recession” with positive growth seen returning this year .Recovery in energy and non-energy sectors seen, underpinned by strong gas production; construction, financial services and trade seen as weak
  • GDP contracted 6.1% in 2016 and 2.6% last year. Debt continues to rise, despite fiscal consolidation; Government debt approaching 65% of GDP.  Economic outlook expected to improve in medium-term, still heavily dependent on energy sector
  • FX shortages affect market confidence; FX imbalance “must be addressed on an urgent and sustained basis” Government has significant financial buffers, including sovereign wealth fund.

Source: Bloomberg

Fed expected to raise interest rates and signal more hikes are coming Published: 26 September 2018

  • The Fed is likely to sound hawkish when it announces an expected rate hike Wednesday and releases its new economic outlook and interest rate forecast.
  • The 2-year Treasury note, which most reflects Fed policy, rose to a new 10-year high Monday, ahead of the meeting.
  • The Fed is expected to sound more confident about the economy, raising its forecast for growth and removing language from its statement that described its policy as easy.

Source: CNBC

Argentina's central bank chief resigns amid IMF bailout talks Published: 26 September 2018

 

  • The president of Argentina's central bank has resigned amid negotiations with the International Monetary Fund (IMF) to bail the South American country out of its volatile economic crisis. The resignation comes as President Mauricio Macriis negotiating additional IMF funding, three months after securing a $50bn loan from the international lender to stabilise Argentina's economy.

 

  • Argentina's weak economy has been hit by a sharp depreciation of its peso currency and high inflation, forcing the government to reach out to the IMF for help. After a crisis of confidence beginning in April saw the peso plunge, Argentina negotiated a $50bn bailout loan from the IMF that included an initial $15bn tranche in June.

 

  • The pesos is down  about 50% year to date. Macri responded by announcing new, and unpopular, austerity measures including halving the number of government ministries and restoring taxes on grain exports.  The central bank also hiked interest rates to a world-high 60 percent and the peso has remained largely stable since its sudden crash in August.

Source:  Aljazeera

Digicel Group Limited Extends Early Tender Date for Exchange Offers and Consent Solicitation Published: 25 September 2018

  • Digicel Group Limited announced on Monday evening that it will be further extending the early tender date and expiration date for its recently announced debt exchange offers to 11:59 p.m., New York time on October 19, 2018
  • This announcement came as Akin Gump, a US law firm acting for Digicel bondholders, told the telecoms group on Monday that the terms offered to those creditors were “unacceptable”. 
  • In a statement, Akin Gump said the holders of more than 60 per cent of the $3 billion that Digicel owes these creditors have agreed not to tender their bonds to the telecoms company in response to its offer. 
  • The lawyers said a committee of bondholders had told Digicel of this “lock-up” agreement and said they were willing to enter talks on an alternative proposal if the company withdraws the original offer or extends its cut-off and early acceptance deadlines. 

For more details visit:  https://www.prnewswire.com/news-releases/digicel-group-limited-extends-early-tender-date-for-exchange-offers-and-consent-solicitations-818712391.html

Source: Cision PR Newswire,  Irish Times

Oil surge Published: 25 September 2018

  • A barrel of Brent crude traded at $80.93 on Monday, the highest level since November 2014, after OPEC and its partners signalled less urgency to boost output at a meeting in Algiers yesterday. 
  • The move comes despite a call from Trump to increase supply in order to cap rising oil prices. Major energy trading houses are predicting OPEC will continue to hold the upper hand with forecasts for $100 crude becoming more common.

Source: Bloomberg

Brexit is going very wrong, but a snap election is the last thing the British public needs Published: 25 September 2018

  • Theresa May's Brexit negotiations with the European Union (EU) are going very, very wrong and there is speculation that the U.K. could be heading for a snap election.
  • Both the ruling Conservatives and opposition Labour party appear to be considering the possibility of a snap election as early as November, particularly in light of May's disastrous meeting with her EU counterparts in Salzburg last week, at which they appeared to throw her and her Brexit proposals under the bus.

 Source: CNBC

Beijing pushes ahead with opening up its financial sector despite trade tensions Published: 25 September 2018

  • ”I hope in three years' time, there will be a number of foreign ventures qualified for full-license, full-ownership operation in the financial sector,” Premier Li Keqiang told a group of business leaders at a World Economic Forum conference.
  • Recent financial reform efforts that Chinese authorities have taken include allowing individual foreign investors in the country to buy mainland-traded stocks, known as A shares, and removing limits of foreign holdings in banks.

Source: CNBC

Petrotrin refinery not closing Oct 1 Published: 25 September 2018

  • Petrotrin’s re­fin­ery gates won’t be closed im­me­di­ate­ly on Oc­to­ber 1 - there’ll be a phased ex­it of em­ploy­ees start­ing with the re­fin­ery. 
  • The jobs of al­most 4,800 per­ma­nent and tem­po­rary/ca­su­al em­ploy­ees will all be af­fect­ed, par­tic­u­lar­ly 1,700 re­fin­ery posts. Work­ers will even­tu­al­ly have to reap­ply for jobs in a re­struc­tured Ex­plo­ration and Pro­duc­tion di­vi­sion which will be Petrotrin’s new fo­cus. 
  • Notes to Petrotrin’s Au­gust 2018 fi­nan­cial state­ments showed the com­pa­ny record­ed a net prof­it af­ter tax of $83.2 mil­lion for last month. Ex­plo­ration and Pro­duc­tion, in­clud­ing Trin­mar, record­ed a net prof­it of $20.5 mil­lion - but Re­fin­ing and Mar­ket­ing record­ed a net loss of $7.5 mil­lion. 
  • The board’s memo al­so stat­ed that de­tails on com­pen­sa­tion and ben­e­fits are “cur­rent­ly be­ing fi­nalised.”

 Source: TT Guardian