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
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-'.
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.