RATING DRIVERS

Strengths:

• Large regional economy, supported by both energy and non-energy activities
• Satisfactory financial sector, monetary and exchange rate conditions
• Comfortable debt service coverage when compared to its regional peers

Weaknesses:

• International reserves continue to decline
• COVID-19 has significantly eroded fiscal performance
• Social vulnerabilities persist, worsened by rising unemployment and heightened crime levels
• Continued lack of reliable and timely macroeconomic data

Rating Sensitivity Factors:

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

• A decrease in the total general government debt to below 65% of GDP over the medium-term
• A sustained improvement in debt servicing capability to above 7 times over 2 consecutive years
• A fiscal surplus in excess of 3% of GDP sustained over 2 consecutive years
• A rise in the import cover to 12 months or more over the next 24 months

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

• An increase in the total general government debt to above 100% of GDP over the next 12 months
• A sustained deterioration in debt servicing capability to below 3 times over 2 consecutive years
• A fiscal deficit in excess of 9% of GDP sustained over 2 consecutive years
• A fall in the import cover to 6 months or less over the next 12 months
• GDP contraction of >2% in 2021 and/or growth of <1% in 2022

Trinidad and Tobago (T&T) are the two southernmost islands of the Caribbean chain and lie just seven miles off the north-eastern coast of Venezuela. The islands are outside of the usual path of hurricanes and have largely been spared the annual devastation that some of their northern neighbours have endured from storms and weather-related troughs. The population, estimated to be 1.4^[1] million people, comprises descendants of primarily India and Africa. The reported adult literacy rate is above 98 per cent^[2] and education is free up to the secondary school level, with significant subsidization of tertiary education. The official language is English.

The expansion of T&T’s oil industry in the 1950s moved the country from a sugar-based to an energy-based economy. The vast petroleum and natural gas reserves have enabled the country to develop downstream industries such as the production of liquefied natural gas, methanol and nitrogenous fertilizers. The country also has strong financial services, manufacturing, and wholesale & retail distribution sectors. Tourism is a growing sector in the economy.

[1]  Source: Central Statistical Office (CSO)

[2] Source: World Bank

Analytical Contacts:

Stefan Fortuné

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

E-mail: sfortune@caricris.com

Megan Dass

Tel: 1-868-627-8879 Ext. 239

E-mail: mdass@caricris.com

Website: www.caricris.com

E-mail: 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.

CariCRIS lowers the sovereign issuer ratings assigned to the Government of The Republic of Trinidad and Tobago

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RATING DRIVERS

Supporting Factors

• Leading market position in the Caribbean with continued growing market share in international markets
• Financial performance negatively impacted by COVID-19 pandemic with a slight rebound in the 1st quarter of 2021
• Good capitalization levels and adequate short-term liquidity metrics
• Strong and effective Enterprise Risk Management (ERM) framework

Constraining Factors

• Global economic uncertainty along with exposure to weak economic conditions in countries which SFC’s subsidiaries operate present significant downside risks to the profitability of SFC

Rating Sensitivity Factors

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

• Substantial improvement in the market position and financial performance and profitability of Sagicor USA
• An improvement in the creditworthiness of Jamaica where SFC derives more than 30% of its revenue

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

• A significant change in capitalization, especially on account of future acquisitions resulting in the MCCSR falling to 175% or lower
• A reduction in the creditworthiness of Jamaica where SFC derives more than 30% of its revenue
• Substantial deterioration in consolidated financial performance, with a greater than 35% fall in premium income.
• Decrease in Interest Coverage to <1.5X
• Increase in Debt to Equity ratio to >75%

Sagicor Financial Corporation Limited (SFCL) was formed with the demutualization of Barbados Mutual Life Assurance Society through an initial public offering on the Barbados Stock Exchange in 2002. The Group was redomiciled in Bermuda in 2016, and then, on December 5, 2019, Alignvest Acquisition II Corporation (Alignvest)^[1] acquired all the shares of SFCL. SFCL was renamed Sagicor Financial Company Ltd (SFC) and is now listed and traded solely on the Toronto Stock Exchange. This sale transaction resulted in approximately US $450 million in new capital being raised for the Group.

The Group operates now in 20 countries across the Caribbean, USA, and Latin America, offering through its subsidiaries, individual life, health and annuity products, group life and benefits administration, banking and investment management services, and property and casualty insurance, amongst other financial services. In 2020, its total revenue was derived from the United States of America (36%), Jamaica (31%), Trinidad and Tobago (14%), Barbados (10%), with other Caribbean territories (9%).

In September 2019, the Group issued a bond in two tranches, Tranche A – J $ 5.7 billion and Tranche B – US $31.8 million, carrying annual interest rates of 6.25% and 5.1% respectively. Both tranches had an original tenor of 13 months with fixed interest rates and a bullet repayment of principal upon maturity^[2]. Upon maturity on October 27^th, 2020, the bondholders consented to an extension request made by SFC to extend the maturity date by 18 months to April 2022. The repayment structure of the bond remains the same as originally issued with fixed interest rates and a bullet repayment of principal upon maturity in April 2022^[3]. Notably, the interest rate on Tranche A (J $) remained unchanged while the interest rate for Tranche B (US $) was revised to upward to 5.5%.

[1] A Toronto-based Special Purpose Acquisition Corporation (SPAC).

[2] The bond facilities were fully underwritten by Sagicor Investments Jamaica Limited, a fully owned subsidiary of Sagicor Group Jamaica and the Lead Arranger and Broker for the bonds.

[3] The bond matures on April 26th 2022 with an option of further extension.

Analytical Contacts:

Nadia Sanchez

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

E-mail: nsanchez@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

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

RATING DRIVERS

Supporting Factors

• Continued strong market position in port operations and industrial real estate management in T&T enhanced by diversified product offering
• Reliable earnings stream on the industrial estate attributed to a stable tenant base, notwithstanding high rental concentration
• Comfortable financial performance in 2020 supported by adequate capitalization and debt protection metrics albeit at lower levels

Constraining Factors

• Prevailing economic conditions constrain profitability and growth

Rating Sensitivity Factors

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

• A greater than 10% y-o-y improvement in revenue for 2 consecutive years
• An improvement in profits by 40% for 2 consecutive years excluding the effects of revaluation gain

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

• A material decline of 10% in revenue and profits in 2021
• Any material Company event that can result in default/breaches of covenants
• Current ratio of <1x for a sustained period of 12-18 months

Point Lisas Industrial Port Development Corporation (PLIPDECO) was established in 1966.   The Government of the Republic of Trinidad & Tobago (GoRTT) is its majority shareholder with 51%, with the other 49% being widely held by various institutional and individual investors as a listed public entity.

PLIPDECO’s two core activities are: 1) port management and operations, including cargo handling services, and 2) industrial real estate management.

Port Operations

PLIPDECO’s port operations entail handling a wide range of traffic including dry and liquid bulk, cargo containers, containerized and conventional general cargo^[1] and breakbulk, servicing both the business sector and individuals. The port consists of 6 general cargo and container berths. It covers an area of approximately 23.33 hectares and has a 10-year average annualized throughput of 182,000 twenty-foot equivalent units (TEUs)^[2] and 326,000 Metric Tons of breakbulk cargo per year^[3].

Industrial Real Estate Management

PLIPDECO is also the owner and landlord of the 863-hectare Point Lisas Industrial Estate. It comprises 103 tenants that include petrochemical companies, steel plants, manufacturing, and service companies.

[1] Includes non-oil bulk cargo and equipment.

[2]An inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals. It is based on the volume of a 20-foot-long (6.1m) intermodal container, a standard-sized metal box which can be easily transferred between different modes of transportation, such as ships, trains and trucks.

[3] For the 10-year period, 2011 to 2020.

Analytical Contacts:

Musa Abdullah

Tel: 1-868-627-8879 Ext. 233

E-mail: mabdullah@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

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.