UPDATE 1-Moody's cuts Jamaica's rating to Caa3, stable outlook
NEW YORK, March 6 (Reuters) - Moody's Investors Service cut Jamaica's sovereign foreign currency credit rating to Caa3 from B3 on Wednesday, citing the Caribbean nation's domestic debt exchange as a distressed event that still leaves it with a high debt burden.
Jamaica launched a $9.1 billion domestic debt exchange last month to try to alleviate the financing pressures of its sizeable debt.
"The still high debt burden as nominal debt levels remain unchanged since the announced restructuring did not impose any principal haircuts," Moody's said in a statement, outlining its reasoning for the rating action.
Moody's projected that Jamaica's 2013 debt metrics, at 119 percent of gross domestic product and 470 percent of revenues, are among the highest of all rated sovereigns.
Earlier on Wednesday, Standard & Poor's raised Jamaica's credit rating to CCC-plus from default, following the completion of the exchange.
"Expectations of continued slow growth that will make fiscal consolidation efforts more difficult" was a third reason for the move, Moody's said.
Moody's highlighted that this debt exchange resulted in a net present value loss in excess of 10 percent and is the second distressed debt exchange investors have endured in Jamaica over the last three years. The participation rate in the exchange was about 99 pecent, Moody's said.
Jamaica has a stable credit outlook from Moody's, as well as S&P. Fitch Ratings has Jamaica at CCC, upgrading them from restricted default on March 1.
"Government gross financing needs - fiscal deficits plus amortizations - averaged 20 percent of GDP in the last five years. We expect financing needs will drop to less than 10 percent of GDP this year and next as the debt restructuring pushes out upcoming maturities," Moody's said.
"Our projections indicate that the debt burden will rise rapidly starting in 2015, posing credit concerns absent greater growth."
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