Category: Ratings Rationale

NiQuan Energy Trinidad Limited

RATING ACTION:

On March 16, 2023, CariCRIS lowered the assigned issuer/corporate credit ratings by 1 notch to CariBBB+ (Foreign and Local Currency Ratings) on the regional rating scale, and ttBBB+ on the Trinidad and Tobago (T&T) national scale as well as jmA+ on the Jamaica national scale to NiQuan Energy Trinidad Limited (NETL 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:

Full commercialisation of operations with a track record of on-spec production and adequate debt servicing
Higher than projected revenues and profits based on favourable selling prices and lower than projected operating costs

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

Non-achievement of optimal LRT by June 30, 2023 resulting in the inability to refinance the existing STNI or obtain approval for a further extension by noteholders by July 31, 2023
Unsuccessful start-up of full commercial operations at the nameplate capacity of 2,400 bpd by September 1, 2023, and/or production falling below minimum operational efficiency guarantee of 2,640 bpd for a sustained period
A fall in the Interest Cover to below 1.5 times and/or a drop in the Effective Debt Service Coverage Ratio to below 1 time postproduction at a minimum guaranteed nameplate capacity of 2,400 bpd

RATING RATIONALE

Caribbean Information and Credit Rating Services Limited (CariCRIS) has lowered the assigned issuer/corporate credit ratings by 1 notch to CariBBB+ (Foreign and Local Currency Ratings) on the regional rating scale and ttBBB+ on the Trinidad and Tobago (T&T) National Scale as well as jmA+ on the Jamaica National Scale to NiQuan Energy Trinidad Limited (NETL or the Company). The regional and national scale T&T ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in the Caribbean and within T&T is adequate. The Jamaica national scale ratings indicate that NETL’s creditworthiness, compared to other obligors in Jamaica is good.

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Brandon Singh

bsingh@caricris.com

PBS Technologies (Trinidad) Limited

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the assigned Bond Issue Credit ratings of CariA- (Foreign Currency Rating) and CariA (Local Currency Rating) on the regional scale and jmAA+ (Local Currency Rating) and jmAA (Foreign Currency Rating) on the Jamaica national scale to the US $40 million bond debt issue of PBS Technologies (Trinidad) Limited (PBSTTL or the Company). A stable outlook was maintained.

RATING SENSITIVITY FACTORS:

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

An increase in PAT of above 10% for 2 consecutive years
An improvement in the sovereign risk profiles of the countries that the Company operates in

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

A greater than 4% decline in operating revenue for 2 consecutive years
A decline in interest cover to below 2 times
A deterioration in the Company’s debt/ TNW ratio to more than 3.5 times
A breach of any of the financial covenants associated with the US $40 million Bond
Material deviation of PBSTTL’s audited financial accounts for 2022 from management accounts presented, resulting in lower profitability and cash flow adequacy metrics
Unfavourable capital market conditions that could hinder access to new capital given the likelihood that the US $40 million bond would have to be refinanced in 2026
A deterioration in the sovereign risk profiles of the countries that the Company operates in

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-8356

khamelt@caricris.com

Maxwell Gooding

mgooding@caricris.com

Island Car Rentals Limited

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the assigned ratings at jmBBB (Foreign & Local Currency Rating) on the Jamaica national scale to the J $2.2 billion debt issue of Island Car Rentals Limited (ICR or the Company). A positive 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 to the ratings of the Government of Jamaica
A 10% or greater annual increase in car rental income sustained for another year
A DSCR of more than 2.5 times sustained over the next 12-15 months

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

A deterioration to the ratings of the Government of Jamaica
Total operating revenue growth slows below 10% over the next 12-15 months
An 8% or greater rise in total operating expenses
Failure to satisfy the minimum DSCR requirement
Inability to refinance or fully repay the J $2.2 billion bond issue at maturity

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Kyla Balwant

kbalwant@caricris.com

The Port Authority of Jamaica

RATING ACTION:

On March 16, 2023, CariCRIS reaffirmed the assigned Issuer/Corporate credit ratings of CariBBB+ (Foreign Currency Rating) and CariA- (Local Currency Rating) on the regional rating scale, and jmAA (Local Currency Rating) on the Jamaica national scale of The Port Authority of Jamaica (PAJ or the Authority). A positive 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.
A significant increase in total operating revenue or profit leading to the DSCR remaining above 1.5 times over the next year.

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

Unexpected material changes in the terms and conditions of its concession agreements with its cargo operators due to force majeure that will negatively impact the payment of guaranteed fixed revenue to the Authority.
A greater than 25% decline in operating revenue over the next 12-15 months.

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Jeffrey James

jjames@caricris.com

TRINRE Insurance Company Limited

RATING ACTION:

On November 4, 2022, CariCRIS reaffirmed the assigned Corporate Ratings of CariA (Foreign and Local Currency Ratings) on the regional scale and ttA on the Trinidad and Tobago national scale to TRINRE Insurance Company Limited (TRINRE or the Group). A stable outlook was maintained.

RATING SENSITIVITY FACTORS:

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

An improvement in profit after tax of over 10% over the next 3 financial periods
Growth in TNW by more than 17.5% or more for 3 consecutive financial periods
Further diversification of business into other regional territories
An improvement in the ratings assigned to the T&T sovereign

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

A deterioration of the Company’s capital adequacy ratio to 150% or lower on a sustained basis for at least 6 months under normal conditions.
A lowering of the ratings assigned to the T&T sovereign
A lowering of the ratings of one of TRINRE’s main reinsurers
Reduction in PAT by 10% or more for 2 consecutive financial periods
Reduction in TNW by 20% or more for 2 financial periods

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-8356

khamelt@caricris.com

Maxwell Gooding

mgooding@caricris.com

Home Mortgage Bank ‘s Collateralized Mortgage Obligation CMO-2020-01

RATING ACTION:

On December 15, 2022, CariCRIS reaffirmed the assigned ratings of ttA+ (National Local Currency Ratings) on the Trinidad & Tobago national scale for Home Mortgage Bank’s Collateralized Mortgage Obligation – CMO 2020-01. 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:

A NPL ratio below 5% sustained over the next 12 to 15 months and/ or a return to delinquency levels of 2% – 4% within the underlying mortgage pool over the next 12-15 months.
Satisfactory repayment of Tranche C with payment flows in line with or above CariCRIS’ expectations.

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 20% and/ or NPL ratio of above 8% 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.

RATING RATIONALE

The Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the overall issue ratings assigned to the TT $300 million Collateralised Mortgage Obligation (CMO) of Home Mortgage Bank (HMB) (CMO 2020-01) of ttA+ (SO) on the Trinidad and Tobago (T&T) national scale. This rating indicates that the overall level of creditworthiness of this structured debt obligation, adjudged in relation to other rated debt obligations within T&T is good.

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-4356

khamlet@caricris.com

Sharlene Gordon

Mobile : 1-1876-618-9811

sgordon@caricris.com

Home Mortgage Bank ‘s Collateralized Mortgage Obligation CMO-2019-01

RATING ACTION:

On December 7, 2022, CariCRIS reaffirmed the overall issue rating of ttA+ (SO) on the Trinidad and Tobago (T&T) national scale to the TT $200 million Collateralised Mortgage Obligation (CMO) of Home Mortgage Bank (HMB) (CMO 2019-01). A stable outlook was maintained.

RATING SENSITIVITY FACTORS:

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

An improvement in the loan portfolio quality, with an NPL ratio of lower than 5% and/or a return to delinquency levels of 2% – 4% within the underlying mortgage pool over the next 12-15 months

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

Persistent and further deterioration in the mortgage pool quality with delinquency levels of above 20% and/ or NPL ratio of above 8% 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
Consistent cash flow shortfalls in the underlying mortgage pool over the next 12-15 months
A deterioration in the credit risk profile of T&T leading to increased market risk

RATING METHODOLOGY

The rating methodology we followed in assigning the ratings to the CMO is consistent with that utilised by the international rating agencies for rating securitised debt/structured obligations. Further, we worked closely with an expert at CRISIL in conducting this rating, who served as a peer review for the initial assignment.

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Nadia Sanchez

nsanchez@caricris.com

www.caricris.com

info@caricris.com

Saint Lucia Electricity Services Limited

RATING ACTION:

On December 7, 2022, CariCRIS reaffirmed the Issuer/Corporate Credit ratings CariBBB- (Foreign and Local Currency Ratings) on its regional rating scale assigned to Saint Lucia Electricity Services Limited (LUCELEC 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 sovereign over the next 12-15 months
Continued improvements in economic and business conditions over the next 12 months in Saint Lucia, thereby leading to increased electricity sales

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

A greater than 10% decline in PAT for 2 consecutive years
The occurrence of any event risk that may lead to the financial parameters deteriorating beyond the range for the current rating level
A change in the monopoly position afforded by regulation

Analysts’ Contact Info:

Keith Hamlet

Mobile: 1-868-487-8356

khamlet@caricris.com

Megan Dass

mdass@caricris.com