The Jamaica National Group Limited (JN Group)

CariCRIS assigns “good creditworthiness” ratings to the J $4.6 billion debt issue of The Jamaica National Group Limited

RATING DRIVERS

Supporting Factors

Moderate diversification and good market position in the Jamaican banking sector
Strong capitalization of regulated subsidiaries in excess of regulatory requirements
History of profitable operations underpinned by diverse income streams
Adequate liquidity to support debt servicing
Good governance structure and risk management practices

Constraining Factors

High cost to income ratio
Sluggish economic conditions could constrain revenue growth and profitability

Rating Sensitivity Factors

Factors that could, individually or collectively, lead to an improvement in the ratings and/or Outlook include:

Expansion of the Group’s product and service offerings and/or improvements in operating efficiencies leading to a sustained increased in PAT of 10% for more than 2 years
An increase in the credit rating of the Government of Jamaica

Factors that could, individually or collectively, lead to a lowering of the ratings and/or Outlook include:

A greater than 10% decline in total income for 2 consecutive years
A lowering of the credit rating of the Government of Jamaica
Breach of covenants stipulated in the final term sheet/prospectus for the bond offering
Failure of JN Bank to meet its debt servicing and repayment obligations to JN Group in a timely manner.

COMPANY BACKGROUND

The Jamaica National Group Limited (JN Group or the Company), a holding company, was incorporated in Jamaica in February 2017. The Company’s subsidiary (JN Bank) commenced operations as the Westmoreland Building Society in 1874. In 1960, the Westmoreland Building Society completed its first merger with the Manchester Mutual Building Society. In 1970, following several mergers, the Westmoreland Building Society executed several organisational adjustments including a name change to the Jamaica National Building Society (JNBS or the Building Society). In 2016, the members of JNBS voted to reorganize the entity into the JN Group and convert the deposit-taking arm of the Building Society to Jamaica’s only mutually owned (fully owned by savers and borrowers) commercial bank and the third-largest commercial bank in Jamaica, the JN Bank (the Bank). The Bank of Jamaica subsequently exchanged JNBS’ building society license for a commercial banking license and following the reorganization of the JN Group, a mutual holding company, named The Jamaica National Group, became the parent company for the JNBS subsidiaries.

The Company holds 100% ownership in MCS Group Limited (a non-financial holding company) and JN Financial Group Limited^[1] (a financial holding company). The Group comprises 13 subsidiaries, 2 associated companies, and 1 related company in Jamaica, the United Kingdom (UK), Canada, the United States of America (USA), and the Cayman Islands (Chart 1). The Group’s portfolio of products and services span a wide array of financial, technological, creative, and fleet management services that positions the Group as a leading performer among mixed conglomerates in the region.

The Group’s total assets stood at J $269.7 billion^[2] as at March 2021 and revenue recorded for the year ended March 2021 was J $22 billion. The Group’s largest subsidiary, JN Bank (the Bank), domiciled in Jamaica, accounts for approximately 79.6% and 57%^[3] of JN Group’s total assets and revenue respectively. The Bank offers a wide range of products and services including personal loans, mortgages, credit cards, lines of credit, commercial loans, chequing accounts, and a range of short, medium, and long-term savings accounts. The Company remains focused on its diversification initiatives and deploying efforts to standardize, centralize, and integrate operations across all entities within the Group. Further, the Company also intends to continue to grow its banking business line to diversify and reduce the cost of its funding.

[1] The Subsidiaries consist of JN Bank Limited, JN General Insurance Company Limited (JNGI), JN Fund Managers Limited (JNFM), JN Life Insurance Company Limited (JN Life), JN Money Services Limited, JN Small Business Loans Limited (JNBSL), JN Cayman Limited, and JN Bank UK Limited.

[2] Total assets have been adjusted to exclude intangible assets, unrealized gains/(losses), and contingencies.

[3] On a consolidated basis.

Analytical Contacts:

Kathryn Budhooram

Tel: 1-868-627-8879 Ext. 226

E-mail: kbudhooram@caricris.com

Keith Hamlet

Tel: 1-868-627-8879 Ext. 229

E-mail: khamlet@caricris.com

Website: www.caricris.com

Email: info@caricris.com

Disclaimer: CariCRIS has taken due care and caution in compilation of data for this product. Information has been obtained by CariCRIS from sources which it considers reliable. However, CariCRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. No part of this report may be published / reproduced in any form without CariCRIS’ prior written approval. CariCRIS is also not responsible for any errors in transmission and especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this product.

GOVERNMENT OF SAINT LUCIA

RATING DRIVERS

Supporting Factors

Monetary and exchange rate stability underpinned by membership in a quasi-currency board arrangement
Sound financial sector despite COVID-19 challenges
Economic activity is broad-based although dependent on COVID-ravaged tourism; moderate GDP strengthening is expected in coming years

Constraining Factors

COVID-19 has worsened GOSL’s fiscal position and significantly increased indebtedness
International reserves under pressure; however, external debt servicing expected to be adequate

Rating Sensitivity Factors

Factors that could, individually or collectively, lead to an improvement in the ratings and/or Outlook include:

Substantial changes in the debt levels leading to a debt to GDP ratio below 65%
Achievement of a balanced budget over the medium term
Sustained GDP growth of the order of 3% per annum or more (above pre-COVID-19 level)

Factors that could, individually or collectively, lead to a lowering of the ratings and/or Outlook include:

Significant changes in the fiscal position leading to a deficit larger than 15% of GDP
Substantial changes in the debt levels leading to sustained debt to GDP in excess of 90% alongside a decline in debt servicing to 2 times

ABOUT THE SOVEREIGN

Saint Lucia, “Helen of the West Indies”, is situated in the Eastern Caribbean, at the northern end of the Windward Island chain. The total area of Saint Lucia is approximately 616 km² (238 square miles). Total population is estimated at 181,192^[1], with a plurality of persons living around the capital, Castries. Average life expectancy is 75.7 years. Infant mortality was estimated at 12.7 deaths per 1,000 live births in 2015. The official language is English, but French patois (Kwéyòl) is widely spoken.

Tourism is the mainstay of the economy with the main markets being the United States of America (USA), the United Kingdom (UK), the Caribbean and Canada. Agriculture, specifically bananas, also plays a significant role in employment within the economy. There is a small manufacturing sector which is the most diverse in the Eastern Caribbean. The sector is involved in the production of food & beverage, paper products, the assembly of electronic components and agro-processing.

[1] Ministry of Finance, Economic Growth, Job Creation, External Affairs, and the Public Service – Economic & Social Review, 2020

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

E-mail: ajoseph@caricris.com

Stefan Fortuné

Tel: 1-868-627-8879 Ext. 228

E-mail: sfortune@caricris.com

Website: www.caricris.com

Email: info@caricris.com

Government of the Commonwealth of Dominica

CariCRIS reaffirms its credit ratings for the Government of the Commonwealth of Dominica; Outlook Stable

RATING DRIVERS

Constraining Factors

Small developing country with significant capacity constraints
Weaknesses in the financial sector, particularly the non-bank financial institutions
Fiscal recovery hampered by COVID-19

Supporting Factors

External position remains solid, despite exports decline
GDP, supported by CBI inflows and continued post-hurricane rebuilding, is expected to rebound quickly from COVID-19
Stable political environment

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/or Outlook include

Growth in economic activity of 5% or more above pre-Hurricane Maria levels, sustained for at least 3 years.
A fiscal surplus of more than 5% recorded for 2 consecutive fiscal periods

Factors that could, individually, or collectively lead to a lowering of the ratings and/or Outlook include

Debt/GDP ratio exceeding 100% for another 2 years
Economic and social disruption caused by natural disasters
Material reduction in grants and multilateral funding

SOVEREIGN BACKGROUND

Dominica is an island-nation located in the Eastern Caribbean with a total population estimated at approximately 71,000^[1] persons. The official language is English but French patois is also spoken. The primary economic sectors are agriculture, government services and wholesale & retail trade. Dominica is mountainous and volcanic with tropical rainforest covering two thirds of the island.

Dominica has experienced to two major natural disasters in recent years: Tropical Storm Erika (2015) and Hurricane Maria (2017). Hurricane Maria delivered a devastating blow while the country was still consumed with rehabilitation efforts following Tropical Storm Erika. The destruction caused by these two natural disasters – Tropical Storm Erika (90% of GDP) and Hurricane Maria (298% of GDP) – though severely removing productive capacity, has spurred construction activity and gives opportunity to put in place greater climate resilient infrastructure.

[1] According to the World bank estimates as at 2019.

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile: 1-868-788-4693

E-mail: ajoseph@caricris.com

Stefan Fortuné

Tel: 1-868-627-8879 Ext. 228

E-mail: sfortune@caricris.com

Website: www.caricris.com

Email: info@caricris.com

GODDARD ENTERPRISES LIMITED (GEL)**

CariCRIS reaffirms ‘good creditworthiness’ ratings for Goddard Enterprises Limited

RATING DRIVERS

Supporting Factors

The Group’s wide geographic and industry diversity serves to temper the impact of revenue volatility

Constraining Factors

Materially reduced profitability metrics over the past year driven mainly by the impact of the COVID-19 pandemic
Continued low debt protection metrics
Significant sovereign risk exposure in economies in which GEL operates alongside uncertainties in the global economic environment are likely to present key downside risks to the operations and profitability of the Group

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/ or outlook include:

An improvement in the effective DSCR to more than 2.0 times for 2 consecutive years.
Revenue increases by more than 10% per annum for 2 consecutive years.

Factors that could, individually, or collectively lead to a lowering of the ratings and/ or outlook include:

A decline in the effective DSCR to less than 1 time for 2 consecutive years.
A decline in revenue of more than 20% per annum for 2 consecutive years due to the challenging economic conditions in GEL’s main markets.
End of year financial performance that is materially lower than that projected by CariCRIS

COMPANY BACKGROUND

Incorporated in 1921, Goddard Enterprises Limited (“GEL” or “the Group”), started with the opening of a meat and grocery store in Bridgetown by Joseph Nathaniel Goddard and his son, Victor. This family-run business was converted into a public company in 1978, with the Goddard family retaining a majority shareholding (64%). GEL is now the fourth-largest conglomerate (by assets) operating in Barbados. As of September 2020, it comprised 78 subsidiaries and 33 associated companies employing over 4,700 persons. Its operations, which are spread over 24 industries and 25 countries throughout the Caribbean and Latin America are classified into 4 divisions; namely: (i) automotive, building supplies and services, (ii) manufacturing and services, (iii) catering and ground handling services, and (iv) Caribbean Distribution Partners Limited (CDP^[1]).

[1] CDP is a group of 6 Fast Moving Consumer Goods (FMCG) distribution companies operating in Trinidad and Tobago, Barbados, Grenada, St. Vincent and the Grenadines, Saint Lucia, and Guyana. CDP is owned by the Agostini Group and GEL through a 50:50 joint venture arrangement.

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile: 1-868-788-4693

E-mail: ajoseph@caricris.com

Anelia Oudit

Tel: 1-868-627-8879 Ext. 226

Mobile: 1-868-487-8364

E-mail: aoudit@caricris.com

Website: www.caricris.com

Email: info@caricris.com

GODDARD ENTERPRISES LIMITED (GEL)**

Goddard Enterprises Limited– Withdrawal of Corporate Credit Ratings

GODDARD ENTERPRISES LIMITED (GEL)**

Caribbean Information & Credit Rating Services Limited (CariCRIS), the region’s credit rating agency, wishes to inform the public of the withdrawal of the issuer/corporate credit ratings and outlook for Goddard Enterprises Limited (GEL), which were last reviewed and reported on by CariCRIS on June 16, 2021.

These ratings were withdrawn following CariCRIS’ receipt of notice from GEL on April 9, 2020. As a result, these ratings will no longer be kept under surveillance and as such there will be no further updates on these ratings.

June 28, 2021

Eastern Credit Union Co-operative Society Limited

RATING DRIVERS

Supporting Factors:

Strong market position as the largest credit union in Trinidad and Tobago with growing asset base and membership
Good financial performance as evidenced by continued profitability and asset growth albeit at lower levels

Constraining Factors:

High non-performing loan levels with rising delinquency
Room for improvement in risk management, though strides were made over the last year
Challenging economic environment with increased competitive pressures present significant downside risks to the local credit union industry and the profitability of Eastern Credit Union

Rating Sensitivity Factors

Factors that could, individually, or collectively lead to an improvement in the ratings and/or outlook:

A decline in operating expenses leading to a cost to income ratio of under 50% over 2 consecutive years
A decline of the NPL ratio to <6% for 2 consecutive years

Factors that could, individually, or collectively lead to a lowering of the ratings and/or outlook:

An increase in operating expenses leading to a cost to income ratio of over 70% over 2 consecutive years
NPL ratio remains above 12% in next financial year
A deterioration in the credit rating of the sovereign over the next 12-15 months thereby leading to further weakening of ECU’s asset quality metrics

COMPANY BACKGROUND

Eastern Credit Union Co-operative Society Limited (ECU) was established in Trinidad and Tobago (T&T) in April 1973 under the Co-operative Societies Act. Membership in ECU, which is open to all nationals of T&T, exceeded 201,000 persons as at December 2020.

The credit union offers a range of products and services including savings accounts, fixed deposits, consumer loans, mortgages and business loans. ECU also owns 100% of a real estate management and development company, Eastern Properties Limited (EPL). EPL’s services include the La Joya Executive Suite rental, event venue rentals, sporting complex, facilities management, custodial services and property management.

Analytical Contacts: