Down Again

BARBADOS HAS BEEN HIT with the major credit rating downgrade Government said was likely after it suspended foreign debt payments to commercial creditors.

But having lowered the island’s Long-Term Foreign Currency Rating to Selective Default (SD) yesterday, international credit rating agency Standard & Poor’s (S&P) also warned that a default on Government’s local currency debt obligations was now “a virtual certainty”.

“We could lower the local currency sovereign issuer credit rating to SD if Barbados fails to make debt service payments on its local currency debt or executes an exchange with bondholders,” it announced.

S&P said it took action yesterday after Barbados “failed to make an interest payment due on its 6.625 per cent notes due 2035”. It said that payment was due on Tuesday.

The rating agency revealed that Government’s next significant domestic bond maturity was the $100 million 4.375 per cent Treasury notes due on June 30.

S&P said it believed the Mia Mottley administration “could miss payments on its foreign and local currency debt within the next three months”.

Last week, Government announced the suspension of debt payments due to external commercial creditors. The authorities said they would “endeavour to make scheduled domestic interest payments, but domestic creditors will be asked to roll over principal maturities until restructuring agreements are concluded”. (SC)

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