Standard & Poor’s downgrades the Caribbean Development Bank (CDB)
Standard & Poor’s credit agency here has downgraded the Caribbean Development Bank (CDB) from (AAA) Triple A, the firm’s highest rating, stating that its risk management has weakened.
“We lowered the long-term issuer credit rating on the bank to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating,” said the Wall Street-based Standard & Poor’s Rating Services (S&P) in a statement issued on Wednesday.
(More: Moody’s downgrades the CDB)
But it added, “The stable outlook reflects our expectation that despite weaknesses in the risk management framework, the bank’s financial position will remain in line with its rated peers and that the very strong shareholder support will persist.”
S&P said the downgrade reflects its view that CDB’s risk management is not commensurate with other “AAA” rated multilateral lending institutions, particularly given its size and regional economic weakness.
“The CDB has failed to comply with one of its internal liquidity policy guidelines, and borrower concentration remains high,” it said.
The rating agency said the bank’s liquidity was tighter in 2011 than in previous years, stating that at the end of 2011, the CDB had a negative funding gap of 3 to 12 months due to US$226 million of debt maturing in 2012.
It said liquid assets represented 70 percent of undisbursed loans and projected one year of debt service at the end of 2011.