Business
Standard & Poor’s downgrades the Caribbean Development Bank (CDB)
Despite covering 143 percent of debt maturing in one year or less, S&P said the CDB’s liquid assets were less than the minimum of 200 percent it maintained during the prior five years.
It said the CDB expects to raise sufficient debt this year to roll over its 2012 maturities and finance a planned US$100 million of lending.
“Related to liquidity, funding management is of concern and compares less favorably with the diversified funding strategies of other small multilateral institutions,” the statement said.
It said the CDB’s reliance on capital markets has resulted in a concentration of maturities in 2012-14.
“Borrower concentration has historically been high for the CDB, and stresses have emerged because of the prolonged economic weakness in the Caribbean,” said S&P said, adding that five borrowers account for 63 percent of loans and 103 percent of narrow risk-bearing capacity.
“Given rising credit vulnerabilities in the region, this high concentration is an increasing credit weakness for CDB,” it added.
The credit rating agency said the on-going economic and financial stress in the region contributed to “public-sector past-due-but-not-impaired loans” of 2.4 percent of public-sector loans in 2011.
Under an accounting presentation change in 2011, S&P said the CDB recognized the full amount of “past-due-but-not-impaired loans” in lieu of the balance of “billed-but-uncollected amounts.”
