by TONY BEST

BARBADOS MAY NOT REGISTER as a blip on the global financial radar screen, but its creditworthiness can attract attention when the nation seeks to borrow on the international money market.

Both Charlie Skeete, until recently a senior economic adviser at the Inter-American Development Bank, and Sir Courtney Blackman, the first Governor of Barbados' Central Bank, used different words to say essentially the same thing.

"The terms can become quite onerous if your credit rating is bad," Skeete, a former Barbados Ambassador in Washington, told the WEEKEND NATION.

"People interested in lending you money can do quite a lot of nasty things if you have a bad credit rating."

Sir Courtney, who is adamant that Barbados' economic management and its decisions must remain in Bridgetown and not be set by sources in New York, Washington or elsewhere, was equally succinct.

"The credit rating of a country can influence the level of interest it pays on a loan," he said.

This focus on Barbados' BBB investment grade rating can be traced to the recent decision of Standard & Poor's to alter the outlook on the island's rating from "stable" to "negative", a signal that sooner or later the rating might be downgraded if economic conditions and Government policy do not change.

S&P is one of the three behemoths of the Wall Street credit rating business. The others are Moody's Investor Service and Fitch Ratings. These private firms were described by Professor Frank Partnoy of the University of San Diego Law School in California as "powerful and influential gatekeepers in global financial markets".

Essentially, the high credit rating Barbados enjoys sends an important and positive message to the private international bond market to which Barbados has turned from time to time to boost its foreign reserves, or to finance development projects.

What's also true is that Barbados has an excellent international reputation for repaying loans on time and that counts for quite a lot.

Clearly, the current rating of BBB can serve as a magnet for firms looking to invest in Barbados' sovereign bonds.

The benefit of a high rating can be seen in the difference in the relatively low interest rate which Barbados negotiates on a loan compared with what Jamaica is forced to pay, because of the latter's lower credit rating.

But where a credit rating by S&P or Moody's, for instance, hardly matters is when Barbados turns to the World Bank, the Inter-American Development Bank and the International Monetary Fund for loan funds.

"When considering applications for loans, these financial institutions have their own economists and researchers to conduct their due diligence before making a decision," said Skeete.

And what about the impact of the rating on the decisions of private investors looking to put their money into a hotel in Barbados?

It may not weigh heavily in their approach. They would be far more interested in the economic, social and political stability of the country and on the project's ability to give them a handsome return on their money, than on the high level of he credit rating.

When the backers of the Ritz Carlton put their project on hold, they weren't concerned about the credit rating but were reacting to the global economic crisis and its impact on Barbados.

In short, the rating has its place in the equation but its importance shouldn't be overstated.