NEW YORK, Feb 12 Rating agencies Fitch and Standard & Poor's on Tuesday cut Jamaica's ratings due to a debt exchange program by the island nation that S&P said it viewed as a default. "Jamaica has announced a domestic debt exchange program that officially launches today," S&P said in a statement. "Based on our criteria, we consider this exchange a default." S&P cut Jamaica's rating to SD, or selective default. Fitch cut the country to C. "In Fitch's opinion, the exchange, if completed, would constitute a 'distressed debt exchange' (DDE) in line with its criteria, as the operation adversely impacts the original contractual terms of domestic bondholders," the agency said in a statement. The cut to both foreign and local currency ratings indicates "that default on both types of debt instruments is highly likely in the near term," Fitch added. Once the exchange is complete, Fitch said, the ratings will be lowered to RD, or restricted default. Jamaica will be lifted out of default after Fitch determines the exchange was successful, usually measured by a minimum participation rate of 90 percent, the agency said. S&P said it lowered its ratings on the bonds included in the proposed domestic debt exchange to D while lowering the ratings on government securities not included in the debt exchange to CCC. Jamaica has been in talks with the International Monetary Fund to discuss a new lending agreement that it hopes will steady the economy of the debt-ridden Caribbean nation. On Monday, according to Thomson Reuters IFR, Jamaican Prime Minister Portia Simpson Miller announced plans to reduce the country's debt as a pre-condition for implementation of a new IMF loan program. The debt exchange offer seeks to exchange Jamaica's domestically issued debt. "It includes foreign currency-denominated debt that was issued locally, which carries foreign currency ratings, which is why we have lowered the foreign currency credit rating to 'SD.' This transaction excludes debt owed to nonresidents," S&P said. A sustained improvement in the government's debt profile will take many years because of structural economic weaknesses, S&P said, even though short-term liquidity strains could ease as a result of the exchange. "We expect to assign a new sovereign credit rating in the 'CCC' category to the new bonds upon the completion of the debt exchange and the issuance of the new bonds, which is scheduled for later this month," said S&P sovereign analyst Joydeep Mukherji. S&P estimates Jamaica's general government debt burden to remain high at above 115 percent of gross domestic product in 2013. Net international reserves of $1 billion at the end of January, a drop of nearly 50 percent from the beginning of 2012, plus low prospects for economic growth will constrain the new rating, S&P said. Moody's Investors Service rates the country B3 with a stable outlook.