Despite the numerous harsh economic blows to the Jamaican market, Standard and Poor's has reaffirmed the country's single-B-plus rating with a stable outlook, and according to sources, the market seems to have maintained conditions that are still conducive to securitizations.

As Jamaica's National Commercial Bank Jamaica (NCB) priced a $125 million privately placed credit card transaction via Citibank last July (see ASR 7/23/01) the country was also enduring a span of violent cross-fire between rival political gangs representing the ruling People's National Party (PNP) and the Jamaica Labour Party (JLP) led by Edward Seaga, an American born, Harvard-trained anthropologist.

The summer followed with a harsh fall season as tourism dwindled after the events of Sept. 11. And, the hardships did not end after that for the Caribbean country, as Hurricane Michelle stormed through the island in November.

The continued beating on the country cut the country's GDP in 2001 to below government expectations at 2.4% and increased the government deficit by 1.5% of GDP over budget to 5% of GDP in 2001/2002, and widened the current account deficit to 8% of GDP, according to S&P.

However, the government was able to counteract these misfortunes by successfully divesting the majority of the remaining assets in the banking sector, further strengthening the banking and financial system regulations, and improving the debt management.

Also, according to sources at S&P, external liquidity remains relatively strong and Jamaica's gross financing gap, in relation to reserves, was a manageable 121%. The government has accumulated reserves that allow for flexibility in managing monetary and exchange-rate policies.

While parliamentary elections are scheduled to take place later this year, S&P said potential changes in the government are not likely to change the general course of economic policy and it should maintain a primary surplus of about 10% of GDP in fiscal 2002/2003.

According to sources, the current conditions in the Jamaican economy remain conducive to structured finance transactions. The NCB deal this past summer, which featured a wrap from XL Capital Assurance Inc., was rated triple-A by S&P with an investment-grade shadow rating. Moody's Investors Service also provided a Baa3' rating to the trust, which does not consider the credit-enhanced wrap. While the deal marked a first-time rating in Jamaica for both rating agencies, NCB completed two previous cross-border, privately placed transactions in the early 1990s.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.