Category: Ratings Rationale

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Grace Kennedy Limited

RATING ACTION:

On June 15, 2023, CariCRIS upgraded the assigned issuer ratings by 1-notch to CariA (Local and Foreign Currency Ratings) on the regional rating scale and reaffirmed the Jamaica national scale ratings of jmAA (Local and Foreign Currency Rating) to GraceKennedy Limited (GKL or the Group). CariCRIS also upgraded by 1-notch on the regional rating scale, the Group’s bond issue of up to J $3 billion ratings to CariA (Local Currency Rating) and reaffirmed the Jamaica national scale ratings of jmAA (Local Currency Rating). A stable outlook was assigned.

RATING SENSITIVITY FACTORS:

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

An improvement in CariCRIS’ sovereign credit risk rating of Jamaica
Successful acquisitions and/or regional expansion over the next 12 to 15 months with a concomitant material improvement in any on its main segments’ market share and GKL Group’s overall financial performance

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

Substantial and sustained deterioration in operating revenue of more than 7.5% over 2 successive years
An increase in operating expenses as a percentage of revenue to more than 36% leading to a fall in operating profit margin to less than 6%
Decline in the parent company’s DSCR ratio to <1.33 times or fall in effective DSCR to below 1.5x
Increase in Debt to EBITDA ratio to >4.0 times
A lowering of CariCRIS’ sovereign credit risk rating of Jamaica

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

aoudit@caricris.com

Brandon Singh

bsingh@caricris.com

Development Finance Limited

RATING ACTION:

On April 28, 2023, CariCRIS reaffirmed the assigned Issuer/Corporate Credit ratings of CariAA- (Local Currency Rating) on the regional scale and ttAA- (Local Currency Rating) on the Trinidad and Tobago (T&T) national scale to the TT $63.3 million bond issue of Development Finance Limited (DFL or the Company). A stable outlook was assigned.

RATING SENSITIVITY FACTORS:

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

Improvement in the credit ratings of the GORTT

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

Material impairment in any of the underlying securitiest:8-627-8879 Ext. 229
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Substantial deterioration in the financial performance and position of DFL
Downgrade in the ratings of the GORTT
Breaches to any of the bond’s covenants
Breach of covenants related to other long-term borrowings including limits related to non-performing loans
A fall in the bond’s security coverage to below 1.0X

Anelia Oudit

Mobile : 1-868-487-8364

aoudit@caricris.com

Kyla Balwant

kbalwant@caricris.com

Trinidad and Tobago Unit Trust Corporation

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the assigned ratings at CariAA (Foreign and Local Currency Ratings) on the regional rating scale and ttAA (Local Currency Rating) on the Trinidad and Tobago (T&T) national scale to Trinidad and Tobago Unit Trust Corporation (TTUTC). A stable outlook was assigned.

RATING SENSITIVITY FACTORS:

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

Improving market and economic conditions over the next 12-15 months, leading to sustained Net Investment Income growth in excess of 20%.
Diversification of funds under management to include a greater share of millennial unitholders.
Successful expansion and implementation of operations into the Caribbean.

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

A sustained decline in equity prices and interest rates over the next 12-15 months, leading to a 30% decline in Net Investment Income.
A deterioration in the credit quality of the fixed-income portfolios below investment grade.

Keith Hamlet

Mobile : 1-868-487-4356

Sultan Mohammed

Mobile : 1-1868-362-7304

smohammed@caricris.com

Home Mortgage Bank ‘s Collateralized Mortgage Obligation CMO-2022-01

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the assigned ratings of ttAA- (National Local Currency Ratings) on the Trinidad & Tobago national scale, for Home Mortgage Bank’s Collateralized Mortgage Obligation – CMO 2022-01. A stable outlook was assigned.

RATING SENSITIVITY FACTORS:

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

An improvement in the credit rating of the sovereign over the next 12-15 months.
Satisfactory repayment of Tranche A with payment flows in line with or above CariCRIS’ expectations.
Sustained improvement in TTMF’s asset quality levels which reduces the originator risk.

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

Persistent deterioration in the mortgage pool quality with delinquency levels of above 10% and/ or NPL ratio of above 5% within the underlying mortgage pool leading to heightened extension and/ or default risk over the next 12-15 months.
Deterioration in TTMF’s NPLs to Gross loans ratio of above 10.5% sustained for 2 financial periods.
A deterioration in the credit risk profile of T&T leading to increased market risk.
Cashflow shortfalls from the mortgage pool that may impair payments of principals and interests.
Replacement of TTMF as Administrator and Trustee and HMB as Registrar and Paying Agent with a lower rated counterparty.

Analysts’ Contact Info:

Keith Hamlet

Mobile: 1-868-487-8356

Sharlene Gordon

Mobile: 1-876-618-9811

sgordon@caricris.com

www.caricris.com

info@caricris.com

Institute of Private Enterprise Development Limited

Caribbean Information & Credit Rating Services Limited (CariCRIS), the region’s credit rating agency, wishes to inform the public of the withdrawal of the credit rating and outlook assigned to the Institute of Private Enterprise Development Limited (IPED). This rating was last reported on by CariCRIS in March 2022.

These ratings were withdrawn following CariCRIS’ receipt of notice from IPED. As a result, the rating will no longer be kept under annual surveillance and as such there will be no further updates on this corporate credit rating.

Massy Holdings Limited (Massy)

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the Issuer/Corporate Credit ratings CariAA+ (Foreign and Local Currency Ratings) on its regional rating scale and ttAA+ (Foreign and Local Currency Ratings) on its Trinidad and Tobago national rating scale assigned to Massy Holdings Limited and its subsidiaries (Massy or the Group). A stable outlook was maintained.

RATING SENSITIVITY FACTORS:

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

Continued intraregional and extra-regional expansion resulting in an increase in operating revenue by > 15% for 2 consecutive financial periods
An improvement in operating profit margin to > 12.5% for 2 consecutive financial periods
An increase in operating cash flows leading to an improvement in effective DSCR to > 7.5 times for 2 consecutive financial periods

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

A deterioration in operating profit margin to < 5% for 2 consecutive financial periods
A decline in operating cash flows leading to a deterioration in effective DSCR to < 1.2 times for 2 consecutive financial periods

Analysts’ Contact Info:

Keith Hamlet

Mobile: 1-868-487-8356

Megan Dass

mdass@caricris.com

Home Mortgage Bank’s Collateralized Mortgage Obligation – CMO 2022-01

RATING ACTION:

RATING SENSITIVITY FACTORS:

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

An improvement in the credit rating of the sovereign over the next 12-15 months.
Satisfactory repayment of Tranche A with payment flows in line with or above CariCRIS’ expectations.
Sustained improvement in TTMF’s asset quality levels which reduces the originator risk.

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

Persistent deterioration in the mortgage pool quality with delinquency levels of above 10% and/ or NPL ratio of above 5% within the underlying mortgage pool leading to heightened extension and/ or default risk over the next 12-15 months.
Deterioration in TTMF’s NPLs to Gross loans ratio of above 10.5% sustained for 2 financial periods.
A deterioration in the credit risk profile of T&T leading to increased market risk.
Cashflow shortfalls from the mortgage pool that may impair payments of principals and interests.
Replacement of TTMF as Administrator and Trustee and HMB as Registrar and Paying Agent with a lower rated counterparty.

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-4356

Sharlene Gordon

Mobile : 1-1876-618-9811

sgordon@caricris.com

www.caricris.com

info@caricris.com

General Accident Insurance Company Jamaica Limited GENAC)

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the Issuer/Corporate Credit ratings jmA- (Foreign Currency Rating) and jmA (Local Currency Rating) on its Jamaica national rating scale assigned to General Accident Insurance Company Jamaica Limited (GENAC or the Company). A stable outlook was maintained.

RATING SENSITIVITY FACTORS:

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

An improvement in the credit rating of the Government of Jamaica
Sustained growth in PAT by > 15% over the next 2 years without adversely impacting capital adequacy and asset quality

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

A lowering of the credit rating of the Government of Jamaica
A 2-notch deterioration of the credit rating of any of GENAC’s top 5 reinsurers by A.M. Best or Standard and Poor’s Ratings Services
Loss of relationship with any of the Company’s major reinsurers and failure to provide viable replacements
A deterioration in the Company’s Minimum Capital Test Ratio below regulatory minimum sustained for 6 months
A 10% fall in gross premium income for 2 consecutive years

Analysts’ Contact Info:

Keith Hamlet

Mobile: 1-868-487-8356