RATING DRIVERS

Supporting Factors:

• Strategically important entity to the Government of Jamaica (GOJ), the domestic maritime sector and the wider economy
• Favourable market position in containerised cargo in Latin America and the Caribbean supported by strategically located ports
• Privatization of some aspects of the commercial operations support expansion and modernization initiatives as well as operating efficiency
• Rebound in financial performance characterized by an uptick in profitability and adequate debt protection metrics albeit at reduced revenue levels
• Legislative framework supports revenue stability and growth
• Adequate governance structure and risk management practices

Constraining Factors:

• Uncertainties in the global environment may present downside risks to PAJ’s profitability

Rating Sensitivity Factors:

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

• An improvement in the credit rating of the sovereign over the next 12-15 months
• A significant increase in revenue leading to DSCR rising to 1.5 times for 2 consecutive years

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

• 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 10% decline in operating revenue over the next 12-15 months.

COMPANY BACKGROUND

The Port Authority of Jamaica (PAJ or the Authority) is a statutory body that was established by the Port Authority Act of 1972. The Authority is the principal maritime agency of the Government of Jamaica (GOJ) with both regulatory and development responsibilities for Jamaica’s port and port facilities.  PAJ reports directly to the Ministry of Economic Growth and Job Creation (MEGJC) and it is a critical agency of the GOJ in the achievement of its Vision 2030 National Development Goal of economic growth and job creation.

In its regulatory role, the Authority monitors and regulates the navigation of all vessels accessing Jamaica’s ports and harbours, including the setting of tariffs on all goods that pass through the public wharves. In addition, as the regulator for Jamaica’s ports and maritime facilities, PAJ provides and regulates compulsory pilotage and tugboat services, provides and maintains all navigational aids including beacons and lighthouses, maintains ship channels to ensure safe access to ports and harbours in Jamaica and serves as a tribunal for wharfage tariffs. The PAJ is also the designated authority with responsibility for ensuring that all of Jamaica’s ports comply with the International Maritime Organization’s (IMO) International Ship and Port Facility and Security (ISPS) code. In its development role, the Authority develops and facilitates investments in seaport and supporting infrastructure. The Authority’s development objectives are aligned with the medium-term strategic priorities of the GOJ. This includes the development of the Business Processing and Outsourcing (BPO) sector as a source of economic growth and job creation. In this regard, the PAJ provides around 1.6 million square feet (sq.ft.) of space for BPO operations across 3 locations: the Montego Bay Free Zone, The Kingston Free Zone^[1] and the Jamaica International Free Zone.  

Analytical Contacts:

Jeffrey James

E-mail: jjames@caricris.com

Anelia Oudit

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:

• Moderate industry diversification and good market position in the Group’s three core business portfolios
• The Group’s portfolio of complementary businesses promotes cross selling and value chain maximization
• Strong cash flows and healthy debt protection metrics continue to drive solid financial performance

Constraining Factors:

• Continued weak economic activity in Trinidad & Tobago and Barbados could exert downward pressure on the Group’s profitability
• Restrictions on accessing US$ liquidity in the Trinidad and Tobago market continue to negatively impact business operations, although improvements have been noted

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

COMPANY BACKGROUND

Massy Holdings Limited (Massy) has its genesis in 1932 when Neal Engineering Company Limited led by Harry Neal, and Massy Limited headed by Charles Massy merged to establish Neal & Massy Engineering Company Limited. In 1958, the company continued its expansion and listed on the Trinidad and Tobago Stock Exchange (TTSE). The Group rebranded in 2014 to form a unified brand and create a common identity. The holding company name was formally changed from Neal & Massy Holdings Limited to Massy Holdings Limited. The Massy Group currently comprises of over 60 companies with a presence in the retail, distribution, automotive, industrial equipment, energy and industrial gas products and supporting services, consumer finance, remittance, reinsurance and real estate industries, in over 15 countries, throughout the Caribbean and including Colombia and the United States of America (USA). 

Analytical Contacts:

Megan Dass

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

E-mail: mdass@caricris.com

Keith Hamlet

Tel: 1-868-627-8879 Ext. 244

Cell: 1-868-487-8356

E-mail: khamlet@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.

RATING DRIVERS

 Strengths

• Continued support from the United Kingdom as an Overseas Territory
• Income and economic fundamentals create high GDP per capita, though tempered by COVID-19
• Dollarization has supported strong economic fundamentals and trade stability
• Prudent fiscal policy guided by the PEFM resulting in low debt levels

Weaknesses

• Human resource capacity constraints on account of a small population base
• Lack of monitoring of the external sector may hinder targeted policymaking

Rating Sensitivity Factors 

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

• Real GDP growth of at least 5% sustained over the next 2 years
• A sustained improvement in visitor arrivals to greater than pre-hurricane levels over the next 2 years
• Continued improvement in company incorporations and registrations to greater than 25% above pre-pandemic revenues sustained over 2 years

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

• An increase in the total public sector debt to above 40% of GDP
• A change in the island’s status as a British overseas territory or a material change in the level of support rendered to the VI from the UK

SOVEREIGN BACKGROUND

The Virgin Islands (VI) is a British Overseas Territory located in the Caribbean. The 150 km² (58 mi²) Territory consists of the main islands of Tortola, Virgin Gorda, Anegada, and Jost Van Dyke, along with over 50 other smaller islands and cays. About 15 of the islands are inhabited. The VI operates as a parliamentary democracy with its own constitution and an elected Head of Government, named the Premier of the VI. Ultimate executive authority in the VI is vested in the Queen of England and is exercised on her behalf by the Governor of the VI. The Governor is appointed by the Queen on the advice of the British Government. Defence and foreign affairs are the responsibility of the United Kingdom (UK).

Analytical Contacts:

Kyla Balwant

Tel: 1-868-627-8879

E-mail: kbalwant@caricris.com

 Stefan Fortuné

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

E-mail sfortune@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:

• 35 Year concession agreement supports sustainability of operations
• Regulatory framework provides toll tariff adjustment mechanism to support revenue growth
• Track record of good operating efficiency
• Essential asset for Jamaica which supports prospects for future traffic growth
• Improving financial performance supports cash flow adequacy and comfortable debt service coverage

Constraining Factors:

• Revenue linked to economic downturns

Rating Sensitivity Factors: 

Factors that can 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
• Consistent increases in PAT and DSCR over the next 2 to 3 years

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

• A deterioration in the credit rating of the sovereign over the next 12-15 months
• A deterioration in the DSCR to less than 1.2 times for 2 consecutive periods
• A deterioration in the interest coverage ratio lower than 1 time

COMPANY BACKGROUND

Transjamaican Highway Limited (TJH or ‘the Concessionaire’, or the Company) is a limited liability company, incorporated and domiciled in Jamaica to develop, operate and maintain the Highway 2000 East-West toll corridor under a 35-year Concession Agreement that was executed in November 2001 with the National Road Operating and Constructing Company (NROCC or ‘the Grantor’), a state-owned enterprise. In April 2002 NROCC was granted a concession to design, finance, construct, maintain and operate Highway 2000 and levy, collect and retain tolls in respect of that motorway. NROCC delegated its obligation for the East-West corridor to TJH. TJH then contracted Bouygues Jamaica to construct the highway and Jamaica Infrastructure Operator Limited (JIO) to maintain and operate the toll road. In December 2019, 100% of the ownership of TJH was acquired by NROCC. In March 2020, the shares of TJH were listed on the Jamaica Stock Exchange in an initial public offering, thereby creating a new ownership structure with NROCC being the largest shareholder owning 20%, with the 2 other largest shareholders being NCB Capital Markets (Cayman) Limited (7.8%) and Musson Investments Limited (6.1%).

The Highway 2000 project was undertaken by the Government of Jamaica (GOJ) with a view to connecting the major population centres of Jamaica by a comprehensive 230-kilometer (km) highway system. The project, which was officially launched in September 1999, serves to generate economic activity, reduce traffic congestion, and expand tourism activity to the rest of Jamaica. Highway 2000 is the single largest project ever undertaken in the country at a cost of US $1.3 billion and is the first of its kind in the English-speaking Caribbean.

Construction of the highway was split into four phases: 1A, 1B, 2A and 2B. TJH’s concession is for the design, construction, and operation of 49.9 km of motorway along the East-West Corridor that is divided into two routes, T1 and T2. T1 connects Kingston with May Pen via a connection through Spanish Town, while T2 connects Kingston with Portmore. Collectively, these two routes cover 80% of the manufacturing and distribution companies in Jamaica and traverse some of the most densely populated communities in the country. The first toll plaza was opened at Vineyards in 2003 and the fourth at Mineral Heights near May Pen in 2012.

The Toll Authority, established under the Toll Road Act 2002, regulates the operation and maintenance of all toll roads, monitors compliance of concessionaires with the terms and conditions of concession agreements, including changes in tariff rates, and advises the Minister of Economic Growth and Job Creation on matters relating to toll roads in Jamaica.

Analytical Contacts:

Khadine Tavares

Tel: 1-876-618-9813

E-mail: ktavares@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.

RATING DRIVERS

Supporting Factors:

• Leading market position underpinned by strong brand equity, large, high-quality fleet, and superior service levels
• Good growth prospects supported by the relaxation of COVID-19 restrictions and the resultant increase in international activity
• Continued good cost control underpinned by in-house maintenance and repairs and negotiated discounts on purchases based on long-standing relationships

Constraining Factors:

• Financial performance negatively impacted by the COVID-19 pandemic though there was a material rebound recorded in the latter half of 2021 and resultant improvements in debt service coverage
• Need for succession planning
• Corporate governance may improve by the addition of qualified independent directors to the ICR Board
• Refinancing risk applies given the capital-intensive nature and consistent working capital requirements of the Company

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% of greater annual increase in car rental income over the next 12-15 months

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

COMPANY BACKGROUND

Island Car Rentals Limited (ICR or the Company) was incorporated in Jamaica in 1973. The Company is headquartered in New Kingston and has two additional locations at the Norman Manley International Airport in Kingston and the Sangster International Airport in Montego Bay.  In addition to motor vehicle rentals, which is its main line of business, the Company also offers other vehicle and driver services such as private transfers and day trips/tours using either sedans or 14-25-seater buses, as well as executive chauffeur services using luxury sedans and SUVs.

ICR was founded by Mr. Michael Campbell, the Chairman and Managing Director, who owns 70% of the shareholding of the Company, and by his business partner, Mr. Derrick DeMercado, who owns the remaining 30%.  Mr. Campbell is a well-respected member of the Jamaican business community and has wide and varied experience in several industries including real estate, insurance, tourism, and auto rentals.  Mr. DeMercado, who was instrumental in the development of the Company’s operations and policies in its formative years, is retired from the Company and is not actively involved in its operations.

ICR remains the largest ground transportation company in Jamaica with a fleet of approximately 1,442 vehicles as October 2021.  The Company offers a variety of rental options to its clients which include sedans, minivans, light commercial vehicles, and small SUVs, mainly from Toyota, Honda, Hyundai, and Mitsubishi. Over its 48-year history, ICR has established a strong brand that was built around the Company’s reputation for superior service and high asset quality.  This has led to the Company receiving several local, regional, and international awards, culminating in ICR being designated as Jamaica’s Leading Car Rental Company since 2011 and as the Caribbean’s Leading Independent Car Rental Company since 2014, by World Travel Awards. For the year 2020, ICR was awarded a Certificate of Excellence by the international car rental company, Rentalcars.com^[1]. ICR has penetrated many international markets and established supplier relationships with over 300 tour operators and travel agencies worldwide.

^[1] Rentalcars.com is the world’s largest online car rental services company with 7 offices across Manchester, London, Barcelona and Malta.

Analytical Contacts:

Kyla Balwant

Tel: 1-868-627-8879

E-mail: kbalwant@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:

• High credit quality of the bond’s underlying assets lends to stable and reliable cash flows for debt servicing
• Comfortable capitalisation reflected in strong capital adequacy ratios despite increasing leverage
• Adequate financial performance with diversity of income and profitable operations
• Moderately diverse investment portfolio with good asset quality
• Stable and growing funding base, though small, adequately supports operations

Constraining Factors:

• Significant sovereign risk exposure compounded by heightened economic uncertainty

Rating Sensitivity Factors

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

• Improvement in the credit rating of the GORTT

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

• Material impairment in any of the underlying securities
• Substantial deterioration in the financial performance and position of DFL
• Downgrade in the rating 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

COMPANY BACKGROUND

Development Finance Limited (DFL or the Company) is a non-bank financial institution licensed in Trinidad and Tobago (T&T) under the Financial Institutions Act (2008) and is registered with the Deposit Insurance Corporation. The Company was initially established as the Trinidad and Tobago Development Finance Company (TTDFC) in the 1970s. DFL’s shareholders currently comprise primarily of the Government of the Republic of Trinidad and Tobago (GORTT) (49.75%) and the Maritime Financial Group (49.75%), through its subsidiaries, the Maritime General Insurance Company Limited (33.17%) and Maritime Life (Caribbean) Limited (16.58%). The remaining 0.5% is held by DFL Caribbean Holdings Limited.

DFL’s mandate is aimed at providing funding and project structure for all small, medium, or large corporations that are engaged in development activities that can benefit the growth of the T&T economy. From inception in the 1970’s, DFL’s core business was to provide financing for business development to Small and Medium Enterprises (SMEs) locally. Since 2011 the Company has widened its product offering to include Merchant banking and FOREX services in addition to long-term commercial financing options. The Company’s products and services are offered through 6 main business lines which include debt arrangement and underwriting, buying and selling of foreign exchange, deposit-taking for fixed deposits, corporate and commercial lending for various financing needs, provision of guarantees, and letters of credit. DFL’s total assets stood at TT $860.2 million as at December 2021, and its total revenue for the year then ended was TT $23.5 million.

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.

RATING DRIVERS

 Supporting Factors:

• Low construction/completion risk supported by a valid Fixed Price Lump Sum Turnkey (LSTK) Contract with Plant Performance Guarantees, though beset by delays in achieving commercial operations
• Reputable and commercially tested technology maximizes the likelihood of a successful operation
• Legally binding supply and offtake agreements in place with a high likelihood of being enhanced with more favourable terms and conditions
• Critical importance of the end products and a changing regulatory and macroeconomic environment underpin favourable demand conditions
• Favourable projected financial performance with adequate debt servicing capacity based on its operational efficiency guarantee output level
• The Owner-Controlled Insurance Program (OCIP) insurance wrap policies serves as an additional layer of protection to the lenders
• Knowledgeable and experienced Board of Directors and Executive Management team, within a good supporting organizational structure

Constraining Factor:

• Vulnerable to the cyclicality of global energy prices

Rating Sensitivity Factors: 

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

• 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/outlook:

• Failure to obtain LRT or the inability to obtain approval for a further extension from noteholders by June 30, 2022.
• Unsuccessful start-up of full commercial operations by June 30, 2022 and/or production falling below 2,400 bpd.
• A fall in the Interest Cover to below 2.4 times and/or a drop in the Effective Debt Service Coverage Ratio to below 1.4 times post start-up.

COMPANY BACKGROUND

NiQuan Energy Trinidad Limited (NETL or the company) is a limited liability company incorporated on July 17, 2012, in the Republic of Trinidad and Tobago (T&T). The principal activity of NETL is to complete, commission, and ultimately operate the former World GTL Trinidad and Tobago Limited (WGTL) plant, which when completed, will produce zero sulphur diesel and naphtha via the Gas-to-Liquids (GTL) process^[1]. As at December 2021, NETL’s shareholders comprised of NiQuan Energy, LLC (NQE)^[2]  (75.7%), as well as institutional and individual investors (24.3%).

The WGTL plant was originally designed and developed under a joint venture between the Petroleum Company of Trinidad and Tobago (Petrotrin)^[3] and a private developer.  The WGTL initiative was premised on the notion that a gas-to-liquids plant was required to improve the quality of the diesel and other refined products from the Petrotrin refinery, given the high level of sulphur content and the increasingly stringent regulations arising in the international markets for refined products regarding sulphur levels.  Construction of the plant commenced in 2007 and the cost of construction was estimated to have been of the order of US $135 million.  In 2009 the project fell into bankruptcy because of significant cost overruns, delinquency on the part of the joint venture partner to fund its portion of the project, and failure to meet project deadlines. 

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

RATING DRIVERS

 Supporting Factors:

• Leading independent renewable power producer in Jamaica with business operations supported by long-term contracts
• Good operating efficiency supported by well-maintained wind turbines
• Solid track record of profitability and above-average return metrics
• Healthy liquidity and strong debt servicing capability supported by strong cash flows from operations
• Satisfactory corporate governance structure and robust risk management practices

Constraining Factors:

• Revenue highly susceptible to the vagaries of nature and wind variability
• Lack of government support and protective legislation for local renewable energy producers

Rating Sensitivity Factors

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

• Successful diversification by the Company into other renewable sources of energy or geographical markets, thereby boosting revenue stability and/or expansion
• Improved operating efficiency, with capacity and availability metrics consistently meeting targets

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

• Breach of any of the debt covenants
• Failure to satisfy any of the performance requirements of the Power Purchase Agreements

COMPANY BACKGROUND

Wigton Windfarm Limited (‘Wigton’ or the Company) is a wind energy facility that was established in April 2000 under the Jamaican Companies Act. The Company was established as a wholly owned subsidiary of the Petroleum Corporation of Jamaica (PCJ), a statutory entity created by the Petroleum Act that was initially mandated to explore and develop Jamaica’s petroleum resources. In 1995, PCJ’s mandate was expanded to include the development of indigenous renewable energy resources and be the main entity in the implementation of Jamaica’s 2009-2030 National Energy Policy. The Government of Jamaica (GoJ) divested Wigton via an initial public offering (IPO) on the Jamaica Stock Exchange (JSE) which was successfully completed in May 2019. Wigton’s shareholders are diversified among institutional and private shareholders. As at June 2021, Wigton’s top 3 shareholders were Mayberry Jamaican Equities Limited (10%), Victoria Mutual Building Society (9.6%) and the National Insurance Fund (6.4%). As at November 10, 2021, Wigton ‘s market capitalization stood at approximately J $5.5 billion^[1].

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:

• Exclusive rights to transmit and distribute electricity in Jamaica
• Regulatory environment supports revenue stability and growth
• Good financial performance underpinned by continued profitability
• Good operating efficiency of the generation assets supported by ongoing investments in maintenance and asset modernization

Constraining Factors:

•  Significant system losses due to high levels of energy theft
• Significant risk retention via self-insurance of T&D assets

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 over the next 12 – 15 months
• Continued improvement in the economic conditions in Jamaica over the next 2 years, thereby leading to increased demand for energy consumption

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

• A deterioration in the credit rating of the Government of Jamaica over the next 12 – 15 months
• Failure to satisfy any existing debt covenants
• At least 2 consecutive years of declining operating profit by 10% or more

COMPANY BACKGROUND

Jamaica Public Service Company Limited (JPS or the Company) is an integrated electric utility company incorporated and domiciled in Jamaica. Its registered office is located at #6 Knutsford Boulevard, Kingston 5, Jamaica. The Company is engaged in the generation, transmission, and distribution of electricity in Jamaica, and purchases power from 9 independent power producers. JPS currently has over 680,000 customers who are served by a workforce of approximately 1,300 employees^[1]. The Company owns and operates 5 power stations, 9 hydroelectric plants, and 1 wind farm.

In 1892, Jamaica became one of the first countries in the world to receive electricity with the establishment of the Jamaica Electric Light Company, which produced and supplied electricity to Kingston using a small coal-burning steam generator. In 1897, the West India Electric Company was established, and using a 3-unit hydroelectric plant on the Rio Cobre River, electricity service was expanded to other areas. In 1907, the Jamaica Electric Light and Power Company leased its licenses and property to the West India Electric Company and several small electricity companies were formed by other towns around the island. On May 25, 1923, JPS was established and subsequently acquired the assets of West India Electric Company and by 1945 the small electricity companies were sold to JPS. By 1970, the Government of Jamaica (GOJ) acquired a controlling interest in JPS and in 1978, JPS was awarded an exclusive 39-year All-Island Electricity License.  This license was amended in 1995 to facilitate the liberalization of the power generation sub-industry and gave JPS the exclusive license to transmit and distribute electricity in Jamaica.   

In 2001, in an effort to improve the profitability and operating efficiency of the Company, the GOJ sold 80% of its shareholding in JPS to Mirant Corporation, a company incorporated in the United States that owned and operated several electric utilities in the United States, Asia, Latin America and the Caribbean. The GOJ maintained a 19.9% shareholding with the balance remaining shares held by a group of minority shareholders. In August 2007, Mirant sold its interest in JPS to Marubeni Caribbean Power Holding Incorporated, a wholly-owned subsidiary of Marubeni Corporation of Japan. 

In April 2011, Marubeni Corporation entered into a Purchase and Sale Agreement with Korea East-West Power (EWP) Company Limited, for joint ownership of majority shares (80%) of JPS. The Company is now 40% owned by MaruEnergy JPSCO 1 SRL^[2] and 40% owned by EWP

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.

RATING DRIVERS

 Supporting Factors

• Competitive advantage lies in its strong affiliation with the NCB Financial Group
• Continued good financial performance underpinned by stable asset growth
• Favourable resource base and adequate capitalisation

 Constraining Factor

• Exposure to downside economic risks in Barbados, the Eastern Caribbean and Jamaica

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
• A deterioration in net interest spread below 1.5% resulting in a reduction in earnings

COMPANY BACKGROUND

NCB Capital Markets (Barbados) Limited (NCBCMBL or the Company) is a securities and investment banking company, licensed by the Barbados Financial Services Commission (FSC). NCBCMBL plays a strategic role in executing the National Commercial Bank Jamaica Limited (NCBJ) wealth and asset management growth strategy and has provided an avenue for the Bank’s entry into Barbados and the Eastern Caribbean region.

The Company was established in May 2015 as a wholly-owned subsidiary of NCB Capital Markets Ltd (NCBCML), the principal asset and wealth management arm of NCBJ^[1]. In September 2015, the entity was granted a broker-dealer license by the Barbados FSC. The current operations entail mainly the management of an investment portfolio, a repo book, and investment banking. Through the employment of the ‘hub and spoke’ model, NCBCMBL operates as an investment banking hub, serving Barbados and the Eastern Caribbean countries, targeting central government, parastatals, medium to large corporates, and high net worth (HNW) individuals in these territories.

 ^[1] NCBCML is the Brokerage and Wealth Management arm of NCBJ and has offered investment products and services to Jamaican institutions and individuals for almost 40 years. NCBJ is the largest bank in Jamaica by assets and is rapidly becoming a major financial services provider in the region. NCBCML is rated CariA- (Local Currency Rating) and CariBBB+ (Foreign Currency Rating) and NCBJ is rated CariA- (Foreign Currency Rating) and CariA (Local Currency Rating) by CariCRIS.

Analytical Contacts:

Keith Hamlet

Tel: 1-868-627-8879 Ext. 244

Mobile: 1-868-487-8356

E-mail: khamlet@caricris.com

 Samuel Raphael

Tel: 1-868-627-8879 Ext. 234

E-mail: sraphael@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.