Caribbean Development Bank pleased with S&P’s new ratings

The Barbados-based Caribbean Development Bank (CDB) says it welcomes the Standard and Poor’s (S&P) revision of the bank’s outlook from “negative” to “stable” and affirmation of its “AA/A-1+” status on long and short term foreign currency ratings.

The US-based rating agency had earlier this month reviewed the CDB’s 2013 results and that the decision to change the bank’s outlook had been based on the abatement of external liquidity pressures among some of the Bank’s largest borrowers as well as “high capital adequacy with a risk-adjusted capital ratio of 23 per cent as of December 31, 2013 to offset the significant embedded credit risk in its portfolio”.

S&P also noted the CDB’s “strong” business profile and its “very strong” financial profile as well as its role as a prominent lender in the Caribbean and ability to lend to sovereigns through the credit cycle.  The US-based rating agency also made reference to the “demonstration of members support for the bank’s mandate by granting a 38 per cent increase of paid-in capital in 2010” and “strengthening of its risk management structures and monitoring over the past 18 months”.

CDB President Dr. Warren Smith said the bank welcomes the revision and is “satisfied that the measures we have taken have been successful in contributing to the improvement in outlook.  He added, “We have strengthened our risk management structures and monitoring; further improved capital adequacy and continued with good liquidity planning. Our priority continues to be equipping ourselves to remain a strong institution which has the confidence of our partners and provides timely, effective support to our BMCs.”

Among the measures implemented included further improvements to profitability; increased monitoring and compliance; establishing the foundation for a successful private sector initiative and strengthening balance sheet capital adequacy to improve our external rating.

Smith stated, “We are encouraged by the gains made within the region in 2013 in fiscal and debt sustainability where they have occurred, while being mindful of the continued challenges of: accelerating growth, sustaining fiscal consolidation, and containing the debt burden. …. Our performance is inextricably linked to that of our member countries’ performance generally, and to their support of the Bank’s preferred creditor status specifically.”

S & P described CDB as having a strong business profile and the CDB said this is reflected in the rating agency’s assessment of CDB’s mandate and of its public policy role as a prominent lender through the credit cycle for its borrowing members in the Caribbean.  He continued, “S&P noted that the Bank’s borrowing members have treated the CDB as a preferred creditor in most periods of stressed external liquidity; evidence of the strength and stability of CDB’s relationship with its shareholders.”  CDB also maintains a strong “Aa1” rating with Moody’s Rating Agency which in November 2013 revised the Bank’s outlook from “negative” to “stable”.

Source: Caribbean360