Category: Ratings Rationale

The National Gas Company of Trinidad and Tobago Limited

RATING ACTION:

On October 12, 2022, CariCRIS reaffirmed the ratings currently assigned to the USD 400 million debt issue of CariAA (Foreign and Local Currency Ratings) on the regional rating scale, and ttAA (Foreign and Local Currency Rating) on the Trinidad and Tobago national scale to The National Gas Company of Trinidad and Tobago Limited (or the Company). The 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 CariCRIS credit rating of the GoRTT
An increase in the DSCR to >3 times over the next 12 to 15 months leading to an improvement in the ability to service its amortised debt payments

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

A fall in gross margins to below 15% for 2 consecutive years
Debt / EBITDA increases to >5 times
A fall in the Effective DSCR to <1 times for 2 consecutive years leading to a deterioration in the ability to service its amortised debt payments
A significant decline in international prices of ammonia/ methanol, leading to a material decline in revenue to > 20%
Inability to monetize receivables from T&TEC which could constrain NGC’s cash flows
Deterioration in the CariCRIS credit rating of the GoRTT

RATING RATIONALE

Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the ratings currently assigned to the USD 400 million debt issue of The National Gas Company of Trinidad and Tobago Limited (NGC) of CariAA (Foreign and Local Currency) on the regional rating scale, and ttAA on the Trinidad and Tobago (T&T) national rating scale. These ratings indicate that the level of creditworthiness of this obligation, adjudged in relation to other obligations in the Caribbean and within T&T, is high.

CariCRIS has also maintained a stable outlook on the ratings. The stable outlook is based on the expectation of continued elevated energy prices^[1] for the remainder of 2022 supported by increased demand and supply disruptions due to the Russian/Ukraine conflict with prices expected to normalise in 2023. Going forward, the favourable outlook for energy and commodity prices is expected to continue to support NGC’s financial performance over the next 12-15 months. As a result, we anticipate continued profitability and robust debt protection metrics going forward.

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Kyla Balwant

kbalwant@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.

Trinidad and Tobago Mortgage Company Limited

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the assigned Issuer/Corporate Credit ratings at CariA+ (Foreign and Local Currency Ratings) on the regional scale and ttA+ (Local Currency Ratings) on the Trinidad and Tobago national scale to the Trinidad and Tobago Mortgage Company Limited (TTMF 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
The advancement of the proposed merger over the next 12 months which will lower the funding costs and introduce new products
Successful completion of housing projects over the next 12 months which should grow TTMF’s subsidized mortgage portfolio

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

A deterioration in the credit rating of the sovereign over the next 12-15 months
A rise in the cost to income ratio to 55% or greater
A sustained increase in interest rates by 100 basis points or greater over the next 12 months resulting in increased debt funding costs
A material reduction (50% or greater) in or complete withdrawal of subsidized funding from GORTT
NPLs/Gross Loans greater than 8% for 2 consecutive years

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Jeffrey James

jjames@caricris.com

NCB Capital Markets (Barbados) Limited

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the Issuer/Corporate Credit ratings CariBBB (Foreign and Local Currency Ratings) on its regional rating scale assigned to NCB Capital Markets (Barbados) Limited (NCB Barbados, NCBCMBL 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:

Improvement in profitability over the next 12 to 15 months supported by earnings from the Eastern Caribbean region
Successful roll-out of new services leading to further diversity in income-earning capability
An improvement in the TNW to total assets ratio to 18%

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

Significant deterioration in the credit risk profiles of the Government of Jamaica and the Government of Barbados
Deterioration in ROA to below 1% sustained for 2 financial years
Deterioration in ROE to below 15% sustained for 2 financial years
Deterioration in the TNW to total assets ratio to below 10%
Deterioration in the ratio of total earning assets to interest-bearing liabilities to below 1 time

Analysts’ Contact Info:

Keith Hamlet

Mobile: 1-868-487-8356

khamlet@caricris.com

Megan Dass

mdass@caricris.com

NCB (Cayman) Limited

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the assigned rating of CariA (Foreign and Local Currency Ratings) on the regional rating scale for NCB(Cayman) Limited. 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:

2 consecutive years of improved profitability as a result of higher income earned from investments and/or loans, thereby contributing to sustained earnings growth of around 10-15%.
A reduction in the NPL ratio to below 5%.
Increase in TNW by 15% or more for 3 consecutive years.

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

A decline in investment yield leading to a contraction in the net interest rate spread to below 1% over the next 12 to 15 months.
Gross loans to gross NPLs ratio of above 15% sustained for the next 12 months.
Deterioration in the credit rating of NCB Jamaica (the Parent of NCBKY) that could materially impact the extent of support available to NCBKY

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-4356

khamlet@caricris.com

Sultan Mohammed

Mobile : 1-1868-362-7304

smohammed@caricris.com

JMMB Group Limited

RATING ACTION:

On September 15, 2022, CariCRIS upgraded the assigned Issuer/Corporate Credit Ratings by 1-notch to CariA– (Regional Local Currency) and CariBBB+ (Regional Foreign Currency) and jmAA- (Local Currency) and jmA+ (Foreign Currency) on the Jamaica national scale for JMMB Group Limited. 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 Government of Jamaica’s (GOJ) credit rating, reflecting a more favourable business environment for the Group
Growth in PAT of 15% or more for 3 consecutive years without any adverse impacts on regulatory capital ratios
Growth in TNW by greater than 15% for 3 consecutive years
Regional expansion initiatives that lead to an improvement in the Group’s market position in its key business segments

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

Deterioration of the NPLs to Gross loans ratio to 8% or more
Deterioration of the CAR of any of the Group’s subsidiaries to below the country specific regulatory requirements
Cost to Income ratio weakens to 75% and over

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-4356

khamlet@caricris.com

Sharlene Gordon

Phone : 1-1876-618-9811

sgordon@caricris.com

Supreme Ventures Limited

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the assigned ratings of CariA- (Local Currency Rating) and CariBBB+ (Foreign Currency Rating) on the regional rating scale, and jmAA- (Local Currency Rating) and jmA+ (Foreign Currency Rating) on the Jamaica national scale to Supreme Ventures Limited (SVL or the Group). The 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 GOJ’s credit rating, leading to an improved overall credit risk profile
An increase in earnings from its Guyana operations to more than 15% of SVL’s annual profits
Revenues increases by more than 10% per annum for 2 consecutive years

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

A deterioration in the GOJ’s credit rating over the next 12-15 months
A deterioration of SVL’s revenue by more than 15%
Interest Cover and/or DSCR below 1.5 times and 3.25 times respectively

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Kyla Balwant

kbalwant@caricris.com

Home Mortgage Bank

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the assigned Issuer/Corporate Credit ratings of CariA- (Foreign and Local Currency Ratings) on the regional rating scale, and ttA- (Foreign and Local Currency Rating) on the Trinidad and Tobago national scale to Home Mortgage Bank (or the Bank). The 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 credit rating of the sovereign over the next 12-15 months
Improvement in the Bank’s interest spread to > 3%, sustained over a 3-year period
NPLs/Gross loans improve to 5% or below over the next 12-15 months

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

A deterioration in the credit rating of the sovereign over the next 12-15 months
A sustained increase in the cost of funds by 100 bps or greater over the next 12-15 months
NPL’s >9% over the next 12-15 months
A deterioration of the total earning assets/ total interest-bearing liabilities ratio to < 1 time

RATING RATIONALE

Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the assigned Corporate Credit ratings of CariA- (Foreign and Local Currency) on the regional rating scale, and ttA- on the Trinidad and Tobago (T&T) national scale to Home Mortgage Bank (HMB or the Bank). These ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in the Caribbean and within T&T is good.

CariCRIS has also maintained a stable outlook on the ratings. The stable outlook is based on our expectation that the Bank will continue to display good profitability and capitalization levels; supported by the likely improvements in economic activity over the next 12-15 months despite the challenges presented by the coronavirus (COVID-19) pandemic, as well as the Russia/Ukraine conflict. While we anticipate no material improvement in asset quality for the remainder of the year, we expect some improvement in 2023 as economic activity gathers pace. Furthermore, the Company is expected to comfortably cover its interest payments as they come due over the next 12 months.

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Nadia Sanchez

nsanchez@caricris.com

Poly Pet Company Limited

RATING ACTION:

On September 1, 2022, CariCRIS downgraded the credit rating assigned to the J $1 billion bond debt issue of Poly Pet Company Limited (Poly Pet or the Company) to jmBB+ (Local Currency Rating) on the Jamaica national scale. A negative outlook was assigned.

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
Improvement of the sovereign risk profile of Jamaica
Improvement in the Company’s DSCR to over 1 time sustained for more than 2 financial years (based on data from audited accounts)
Improvement in Poly Pet’s debt to net shareholder’s equity ratio to below 2 times sustained for 2 financial periods (based on data for audited accounts)
Sustained compliance with bond financial covenants for more than 2 financial periods (based on audited accounts)

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

A greater than 10% decline in operating revenue
A net increase in intercompany balances by 5% over the next 12 months
Continued breach of covenants stipulated in the final term sheet/prospectus for the bond offering
Inability to raise capital given the likelihood that the bond’s principal at maturity would need to be refinanced in 2025
Changes in environmental laws and regulations towards reducing plastic use in Jamaica
Deterioration in the sovereign risk profile of Jamaica
Material deviation of Poly Pet’s audited financial accounts for June 2021 from management accounts presented, resulting in lower profitability and cash flow adequacy metrics

Analysts’ Contact Info:

Keith Hamlet

Mobile : 1-868-487-8356

khamelt@caricris.com

Maxwell Gooding

mgooding@caricris.com

Colonial Fire & General Insurance Company Limited

RATING ACTION:

On September 15, 2022, CariCRIS reaffirmed the assigned Issuer/Corporate Credit ratings at CariA (Foreign & Local Currency Ratings) on the regional scale and ttA (Foreign & Local Currency Ratings) on the Trinidad and Tobago national scale to Colonial Fire & General Insurance Company Limited (Colfire 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 the Republic of Trinidad and Tobago
Sustained growth in PAT by >15% for another year without impacting other financial health indicators like capital adequacy and asset quality

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

A further lowering of the credit rating of the Government of the Republic of Trinidad and Tobago
A 2-notch deterioration of the credit rating of any of Colfire’s top 3 reinsurers by Standard and Poor’s Ratings Services
A deterioration in the Company’s regulatory capital adequacy ratio below 150% over the next 12 months
Loss of relationship with any of the Company’s major reinsurers due to issues relating to the accessing foreign exchange
A 15% fall in Motor Premium Income

Analysts’ Contact Info:

Anelia Oudit

Mobile : 1-868-487-8364

Jeffrey James

jjames@caricris.com