Fitch Downgrades Jamaica to RD

Fitch has downgraded Jamaica to RD from CCC after the sovereign’s closed its domestic debt exchange. The agency says the deal constitutes a coercive debt exchange and that that more than 10% of the total central government’s foreign currency denominated debt to private creditors was subjected to the exchange. Simultaneously, and somewhat confusingly, Fitch also upgraded Jamaica’s long-term foreign and local currency IDRs to CCC and placed them on rating watch positive, as the exchange was successful and could lead to the approval of the $1.3bn IMF stand by program. Fitch analysts did not return calls seeking clarification. Jamaica estimates that the participation rate has already reached over 90% of eligible securities. This in turn will yield important fiscal savings in terms of debt service, says Fitch. Fitch notes that the foreign currency denominated securities issued in international capital markets are not affected by the debt exchange. It affirms the sovereign at CCC.