Standards and Poor’s has raised its long- and short-term foreign currency sovereign credit ratings on Barbados to ‘B-/B’ from ‘SD/SD’ (selective default). At the same time, S&P Global Ratings assigned its ‘B-‘ issue-level foreign currency rating to Barbados’ long-term foreign currency debt issued in its debt exchange.

In a release, S&P  stated that it also affirmed its ‘B-/B’ long- and short-term local currency sovereign credit ratings and ‘B-‘ issue-level rating on Barbados’long-term local currency debt.

It said that on Dec. 11, 2019, Barbados exchanged approximately US$531 million in new 2029 bonds and US$32 million in past-due interest bonds to holders of its U.S. dollar bonds that have been in default since 2018, of which approximately US$677 million, plus accrued interest, was outstanding.

It notes this exchange will apply to holders of Barbados’ English law-governed U.S. dollar bonds, certain Barbados law-governed U.S. dollar bonds, and a U.S.-dollar loan agreement.

S&P adds that the stable outlook balances its view of the   Government’s commitment to a fiscal and institutional adjustment with the economic and political challenges of doing so.

It expects over the next 12-18 months the government will continue to implement policies that achieve fiscal consolidation and instil institutional safeguards, while strengthening macroeconomic stability.

S&P, however, stated that failure to meet fiscal and debt targets over the next year could weaken investor confidence and
result in a loss of official capital inflows.

In reaction to the decision, Prime Minister, Mia Mottley says she was happy to learn of the upgrade noting that it indicates that Barbados is moving in the right direction.