TEXT - Fitch cuts Jamaica's issuer default ratings to 'RD'
Feb 22 - Fitch Ratings has downgraded Jamaica's ratings as follows: --Long-term foreign currency (FC) and local currency (LC) Issuer Default Ratings (IDRs) to 'RD' from 'C'; --Short-term FC IDR to 'D' from 'C'. The country ceiling is affirmed at 'B-' and international senior unsecured debt instruments at 'CCC'. KEY RATING DRIVERS The downgrade of Jamaica's sovereign ratings reflects the following key rating factors: The government has announced that it has achieved an over 97% participation rate in the domestic debt exchange offer launched on Feb. 12 2013. It will proceed with the settlement for bondholders that have tendered in the exchange and will extend the offer for the remainder until Feb. 28, 2013. Fitch believes this operation constitutes a Distressed Debt Exchange (DDE), as the debt exchange adversely impacts the original contractual terms of domestic bondholders. The debt exchange included USD-denominated domestic debt securities to which Fitch's FC IDR applies. As a result, both the Sovereign FC and LC IDRs have been lowered to 'RD' from 'C'. Fitch has also downgraded the short-term foreign currency rating to 'D'. As Jamaica's Eurobonds were not affected by the exchange, Fitch has affirmed these securities at 'CCC'. The country ceiling remains at 'B-'. RATING OUTLOOK Jamaica's ratings will soon be raised out of default following the conclusion of Fitch's assessment of Jamaica's prospective credit profile and debt structure. KEY ASSUMPTIONS AND SENSITIVITIES Fitch believes that the execution of the debt exchange operation will facilitate fiscal consolidation and reduce near-term financing needs. The debt exchange is one of the pre-conditions for Jamaica to sign a new IMF agreement amounting to approximately USD750 million.