S&P Global Ratings downgraded the long-term foreign currency sovereign issuer credit ratings on Barbados to SD, or selective default, from CCC+/C, after the Caribbean island nation missed an interest payment on a bond earlier this week.
The debt watcher said Barbados on June 5 failed to make an interest payment due on its 6.625% notes due 2035. Prime Minister Mia Mottley announced June 1 that the government was immediately suspending payments to external commercial creditors.
"[W]e do not expect the government to subsequently make this payment in light of its announcement," S&P said, adding that Barbados would also likely miss payments on its other outstanding external debt obligations while it negotiates a restructuring agreement with creditors.
S&P also lowered the other long-term foreign currency issue ratings to CC from CCC+. The long-term local-currency sovereign issuer credit and issue ratings were likewise cut to CC from CCC. The ratings were placed on CreditWatch with negative implications.
"Our CreditWatch negative reflects our opinion that there is a greater than one-in-two chance that Barbados could default again on its local and foreign currency debt within the next three months," the rating agency said.
In addition, S&P cut the long-term foreign-currency issue rating on the 6.625% notes due 2035 to D from CCC+.
The rating agency said Barbados has one of the highest debt levels among Latin American and Caribbean sovereigns, with net general government debt of nearly 95% of GDP in 2017.
S&P pointed out that "Barbados' history of wider fiscal deficits and low growth since the global financial crisis has resulted in a significant increase in the government's debt burden."
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
