CariCRIS Reaffirms Trinidad and Tobago’s CariAA Ratings; Outlook Stable

• CariCRIS reaffirmed the Government of Trinidad and Tobago’s sovereign issuer credit ratings at CariAA for both Foreign and Local Currency on its regional rating scale. The ratings indicate that the country’s level of creditworthiness, relative to other rated obligors in the Caribbean, is high.
• CariCRIS maintained a stable outlook, reflecting expectations for broadly maintained macroeconomic stability over the next 12 to 18 months. This is expected to be supported by low but positive real GDP growth, continued financial sector soundness, robustness in Trinidad and Tobago’s sovereign wealth fund, and continued adequacy in international reserves and import cover.
• Key rating strengths include Trinidad and Tobago’s large regional economy, supported by energy and non-energy activities, satisfactory financial sector, monetary and exchange-rate conditions, and strong underlying balance-of-payments characteristics with adequate international reserves.
• These strengths are tempered by fiscal performance that remains closely linked to volatile energy supply and prices, alongside high government expenditure. Persistent social vulnerabilities, worsened by labour-market shocks and crime levels, as well as continued inadequacies in statistical compilations, were also highlighted.
• Positive rating triggers include a reduction in total general government debt to below 65% of GDP over the next 12 months, sustained improvement in the debt service coverage ratio (DSCR) to above 7.00x over two consecutive years, a fiscal surplus above 3% of GDP over two consecutive years, and an increase in import cover to 12 months or more over the next 24 months.
• An increase in total general government debt above 100% of GDP over the next 12 months, a sustained deterioration in debt-servicing capability to below three times, a fiscal deficit above 10% of GDP over two consecutive years, import cover falling to six months or less, or annual economic contraction exceeding 2% over the next two years could result in a rating downgrade.
• The stable outlook reflects CariCRIS’ expectation that Trinidad and Tobago’s external buffers, financial-sector soundness and sovereign wealth fund will continue to support macroeconomic stability, while fiscal performance remains vulnerable to energy-sector volatility and high expenditure.

(Source: CariCRIS)