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 and low 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

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 $610.1 million as at December 2020, and its total revenue for the year then ended was TT $20.6 million.

DFL is proposing to issue a Secured Fixed Rate bond in the amount of up to TT $150 million. The net proceeds of the issue will be used to fund loans and investments and for general corporate working capital purposes. The proposed bond will be issued in 4 tranches as follows:

                   Source: DFL

                   *Each tranche can go up to TT $70 million, however the total issue size will not exceed TT $150 million.

The bond will be fully secured by GORTT or GORTT-guaranteed bonds with the issued amount of each individual tranche secured by a pool of assets of equivalent value comprising of GORTT or GORTT guaranteed bonds. Further, the cash flows from the underlying bonds will be the primary source of repayment of principal and interest payments for the proposed bonds with DFL’s cashflows serving as a secondary source of repayment. Interest on all tranches is payable semi-annually with a bullet payment at maturity. Repayment funds will be established for each tranche into which the underlying GORTT and GORTT-guaranteed securities will be deposited. The deposited assets will be pledged to the Trustee who will maintain full control over the assets during the life of the bond. An asset will only be added or removed from the pool if it is called or prepaid by the issuer of the underlying security. Should there be such an event, the Trustee will repay the cash derived from the early repayment inclusive of any outstanding interest received to the bondholders. Republic Wealth Management Limited will serve as the Trustee and Paying Agent to manage all cashflows pertaining to the secured assets, including but not limited to the receipt of interest and principal payments from the underlying securities and payment of funds to investors.

DFL is a registered issuer with the Trinidad and Tobago Securities and Exchange Commission (TTSEC) and has successfully issued and repaid several Fixed Rate Tax-Exempt bonds in the T&T market in past years.

Analytical Contacts :

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile: 1-868-788-4693

E-mail: ajoseph@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

• Current portfolio of products and wide distribution reach across Jamaica underpin a strong market position
• History of strong and stable financial performance characterized by healthy profitability and adequate debt protection metrics
• Integrated businesses and quality management practices drive sustainability
• Good corporate governance practices supported by a competent management team

Constraining Factors

• Downside risks associated with significant sovereign risk exposure to Jamaica, coupled with uncertainties in the global economic environment are likely to impact Seprod’s earnings

Rating Sensitivity Factors

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

• An improvement in the GOJ’s credit rating over the next 12-15 months
• Sustained improvement in profitability by 10% or more annually for the next 2 years
• Lowering of the Group’s debt to TNW ratio to below 1.5 times

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

• A deterioration in the GOJ’s credit rating over the next 12-15 months
• A fall in the Group’s interest cover and effective DSCR to below 2.5 times and 1.5 times respectively, sustained for 2 years

Seprod and its Subsidiaries (Seprod or the Group) is a food manufacturing and distribution entity, whose origination dates back to 1930 with the formation of the Jamaica Coconut Producers Association which was subsequently incorporated in 1940. In 1944, the Jamaica Coconut Producers Association acquired Soap and Edible Products Limited, which was renamed Seprod Limited in 1956. Throughout its history, Seprod has grown its business and solidified its footprint in Jamaica via mergers and acquisitions in various consumer goods segments.

Seprod has grown to be one of the largest food companies in the English-speaking Caribbean, employing over 1,750 people, with its brands represented in 21 territories around the globe. The Group’s holding company was publicly listed on the Jamaica Stock Exchange (JSE) in 1985. As at March 2021, Seprod’s single largest shareholder was Musson (Jamaica) Limited, owning 48.94% of the Company’s outstanding shares through a combination of its direct 31.87% holding as well as the 17.07% held by its wholly owned subsidiary, Facey Group Limited.

The Group’s principal operating activities are categorized into 3 main pillars:- (i) Dairy, (ii) Distribution and (iii) Ingredients. Seprod’s operations now include 7 wholly owned subsidiaries and 1 joint venture located in Jamaica, St. Lucia, Barbados, Trinidad and Tobago (T&T) and the Dominican Republic. Seprod’s portfolio of manufactured products spans 12 categories ranging across consumer food and household items, flour, packaged retail sugar, beverages, snacks, oils and fats, a range of dairy products, under brands such as Betty, Chiffon, Pronto, Gold Seal, Butterkist, Serge, Golden Grove, Miracle, Brunswick, Supligen and Swizzle, among others. As at December 2020, the Group’s total assets stood at J $27.7 billion and for the year ended December 2020 total operating revenue was J $37.7 billion.

Analytical Contacts:

Kathryn Budhooram

Tel: 1-868-627-8879 Ext. 226

E-mail: kbudhooram@caricris.com

Keith Hamlet

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

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.

CariCRIS lowers the ratings on

NiQuan Energy Trinidad Limited

                             21 May 2021

Further to our Rating Watch assigned on 09^th April 2021, Caribbean Information and Credit Rating Services Limited (CariCRIS) has lowered the assigned issuer/corporate credit ratings of NiQuan Energy Trinidad Limited (NETL or the Company) by 2-notches to CariA- (Foreign and Local Currency Ratings) on the regional rating scale and ttA- on the Trinidad and Tobago (T&T) national scale. 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.

Our lowering of the assigned ratings is driven by the multiple consecutive delays by NETL in achieving full-scale commercial production, with an incident^[1] at the plant that occurred in April 2021 expected to further delay production by at least another five months. These delays have resulted in the Company’s inability^[2] to effectively conclude the refinancing of its existing US $120 million debt facility, thereby increasing its credit risk profile.

CariCRIS also assigned a stable outlook on the ratings. The stable outlook is based on our expectation that, barring any other unforeseen circumstances or events, once commercial operations successfully begin, we expect NETL to be comfortably able to meet all its interest and principal repayments as they come due over the life of the refinanced facility. The stable outlook is also supported by the strong actions taken by the Company post the incident to prevent recurrence, including the commissioning of an independent Root Cause Analysis report, the recommendations from which are already being implemented.

However, should NETL not be able to achieve full commercialisation over the next five to eight months, a pre-requisite for a successful Lender’s Reliability Test certification (LRT)^[3] and refinancing, we may likely lower the Company’s ratings again.

Key Rating Drivers

The key factors supporting the ratings continue to be:

• Use of reputable and commercially tested technology which maximizes the likelihood of a successful operation;
• Legally binding supply and offtake agreements in place;
• Critical importance of the end products along with a highly supportive regulatory framework together drive 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) which serves as an additional layer of protection to the lenders; and
• A knowledgeable and experienced Board of Directors and Executive Management team within a good supporting organizational structure.

The key factor constraining the rating is the Company’s vulnerability to the cyclicality of global energy prices.

Projected financial performance

In response to the plant incident, NETL has successfully obtained unanimous consent by noteholders of the US $120 million Senior Secured construction bridge loan to extend the maturity date to the 30^th June, 2021 and to capitalize interest due and payable until that date. This has allowed the company to remain current in all of its financial obligations.

For our projections, we have assumed a further extension of the US $120 million facility to December 2021 and the commencement of full production and commercialization of operations on October 1^st, 2021. We have also assumed a successful LRT allowing for the 18-month US $120 million note and the associated capitalized interest to be refinanced by a US $150 million 10-year facility^[4]. NETL is expected to generate total revenue of US $16.3 million for the 3-month period (October-December 2021) and average revenue of around US $72.3 million per annum thereafter from 2022 to 2031. With interest expenses of approximately US $12.1 million annually, we expect profit after tax (PAT) and operating cash flow to average US $1.7 million and US $54.2 million per annum respectively over the 2022 to 2031 period^[5].

Assuming NETL acquires the additional financing, we expect NETL to comfortably meet all its interest and principal repayments as they come due over the life of the refinanced facility. NETL’s average interest cover for the period 2022 to 2031 is expected to be of the order of 2.7 times and its debt service coverage ratio (DSCR) to average 1.9 times.

Over the life of the refinanced facility, the ratio of debt to tangible net worth (TNW) reduces with the accretion of profits and retained earnings. Financial flexibility during the early years of operation is reduced, and as such, CariCRIS has assumed dividend payouts will commence from December 2024.

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:

• Unsuccessful start-up of full commercial operations by December 2021 and/or production falling below 2,400 bpd.
• Absence of a functioning Offtake Agreement with either the existing contracted offtaker or an alternate offtaker at the time of plant start up.
• A fall in the Interest Cover to below 2.5 times and/or a drop in the Effective Debt Service Coverage Ratio to below 1.3 times post start-up.
• Failure to refinance the 18-months note or obtain approval for a further extension by noteholders by June 30^th , 2021.

 __________________________________________________________________________________________________

For more information on the ratings of NiQuan Energy Trinidad Limited, please visit www.caricris.com or contact:

  E-mail: kbudhooram@caricris.com

Note

This press release is transmitted to you for the sole purpose of dissemination through your agency/newspaper/magazine. You may use this press release in full or in part without changing the meaning or context thereof, but with due credit to CariCRIS. CariCRIS has the sole right of distribution of its press releases, for consideration or otherwise, through any media, including websites, portals, etc.

RATING DRIVERS

Supporting Factors

• Growing player in the Jamaica financial services sector with strong support from the Victoria Mutual Building Society
• History of good financial performance
• Adequate capitalisation levels

Constraining Factors

• Structural subordination of VMIL’s cash flows and current repayment structure of outstanding debt may subject the Company to refinancing risks
• Small player in a highly competitive market
• Significant exposure to the highly indebted Jamaica economy

Rating Sensitivity Factors

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

• Expansion of the Group’s product and service offerings and/or improvements in net interest spreads leading to a sustained increase in PAT of 10% or more for 2 years
• An improvement in the credit rating of the Government of Jamaica
• Successful refinancing of debt due in the next 12-months leading to a reduction in the overall cost of funds

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

• Deterioration in VMWM’s total capital to total assets ratio to 7.5% or lower
• A deterioration of VMWM’s capital base to risk weighted assets ratio to 12.5% or lower
• A lowering of the credit rating of the Government of Jamaica
• Failure to repay or refinance upcoming debt maturities

• COMPANY BACKGROUND

  Victoria Mutual Investments Limited (VMIL or the Company) is domiciled in Jamaica and was incorporated in 1984. The Company is 80% owned by the Victoria Mutual Building Society (VMBS or the Building Society)^[1] with the other 20% owned by various institutional and individual investors following the listing of 20% of its shares on the Jamaica Stock Exchange (JSE) in 2017. In 1994, a wholly-owned subsidiary, Victoria Mutual Wealth Management Limited (VMWM) was incorporated. VMWM is licensed by the Jamaica Financial Services Commission (FSC).

  VMIL and its subsidiary provide a comprehensive suite of financial services and contribute to the Victoria Mutual Group’s (the VM Group[2]) overall goal of being an integrated financial services Group. VMIL’s range of products and services includes margin loans, insurance premium financing, lease financing, underwriting services and secured corporate loans. Additionally, as a licensed securities dealer, VMWM also offers a range of services including stock and investment brokering, investment advisory services and securities dealing services. Since 2011, VMWM has managed to diversify its sources of revenue from primarily interest income as it increased its activities in the asset management and capital markets spaces.

  The Group continues to increase its product and service offerings towards further diversification and expansion. In September 2019, VMIL took its first step towards regional expansion with the acquisition of a 30% stake in Carilend[3] .

  [1] VMBS was incorporated in Jamaica in 1878 as a Building Society and currently has approximately 300,000 members. Over the years VMBS has transitioned and diversified its operations into Wealth Management, Asset Management, Pensions Management, and other financial services. VMBS is regulated by the Bank of Jamaica.

  [2] Refers to VMBS and its subsidiaries which includes Victoria Mutual Property Limited, Victoria Mutual Pensions Management Limited, VMBS Money Transfer Services Limited, Victoria Mutual Finance Limited (UK), VMBS Overseas (UK) Limited, and Victoria Mutual Foundation Limited.

  [3]Carilend is a FinTech company incorporated in Barbados and founded in 2015 facilitating peer to peer lending in the Caribbean.

Analytical Contacts:

Kathryn Budhooram

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

E-mail: kbudhooram@caricris.com

Keith Hamlet

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

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

Supporting Factors:

• Strong market position supported by a well-established brand and long history in the Jamaican food trading industry
• Robust corporate governance structure and risk management practices
• Integrated operations in the Food Trading Division enables value chain maximisation and increased operational efficiencies
• History of good financial performance characterized by consistent revenue growth and profitability as well as adequate debt protection metrics

Constraining Factors:

• Significant sovereign risk exposure in Jamaica alongside uncertainties in the global economic environment are likely to present key downside risks to the operations and profitability of GKL

Rating Sensitivity Factors

Factors that can lead to an improvement in the ratings /outlook:

• An improvement in CariCRIS’ sovereign credit risk rating of Jamaica

Factors that can lead to a lowering of the Ratings/Outlook:

• Decline in DSCR ratio to <1.33 times
• Increase in Debt to EBITDA ratio to >4.0 times
• A lowering of CariCRIS’ sovereign credit risk rating of Jamaica

GraceKennedy Limited (GKL or the Group) is a Food and Financial Services conglomerate that was incorporated in 1922 and is domiciled in Jamaica. The Group, which is listed on the Stock Exchanges of Jamaica and Trinidad and Tobago (T&T), was originally founded by Dr. John J. Grace^[1] and Mr. Fred William Kennedy who acquired the shares of the wholly Jamaican subsidiary, Grace Limited, of W.R. Grace and Company^[2]. W. R. Grace and Company is a Chemical Conglomerate based in the United States of America (U.S.A.) that for much of its early history was involved in maritime shipping, mining, and agriculture in South America. W. R. Grace & Company divested its operations in Jamaica during the latter part of the global economic depression of 1920 – 1921. GraceKennedy and Company Limited was formed on February 14, 1922, and initially operated as a small trading establishment that eventually expanded to include mercantile, commercial and other related businesses.

Over the ensuing years, the Group’s focus has been on regional and international expansion as well as diversification of its business lines through mergers and acquisitions, the development of strategic partnerships and organic growth. GKL’s operations have now expanded to include 46 subsidiaries, 6 associated companies and 2 joint ventures with operations in over 40 countries that include Jamaica, the U.S.A., the United Kingdom (U.K), Canada and several other Caribbean, African and European countries (Chart A). The Group’s total assets stood at J $167.3 billion^[3] as at December 2020 and its total operating revenue for the year ended was J $115.4 billion, with approximately 53.4% of total operating revenue being derived from Jamaica.

The Group is organized into two (2) divisions, GK Foods, and GK Financial Group, with the revenue from GK Foods representing around 79% of total revenue annually. GK Foods’ principal activities include (i) the merchandising of general goods and food products, both locally and internationally; (ii) manufacturing/processing of food products through GKL owned factories and external suppliers; (iii) the distribution of Grace, Grace-owned and third-party brands in Jamaica and internationally; (iv) the operation of retail outlets through the Hi-Lo Supermarket chain in Jamaica.

[1] Dr. Grace, a member of the family that founded the predecessor company, W. R. Grace and Company Ltd, worked at the predecessor company Grace Limited – www.wikipedia.com.

[2] W. R. Grace and Company Ltd was founded in Peru in 1854 by Mr. William Russell Grace, an Irish immigrant who settled in South America with his family – www.wikipedia.com.

[3] Total assets have been adjusted to exclude intangible assets, unrealized gains/(losses) and contingencies.

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile: 1-868-788-4693

E-mail: ajoseph@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 market positions and strong brand equity supports a consistent and healthy financial performance
• Good financial performance despite a challenging operating environment
• Comfortable capitalization levels
• Strong and comprehensive enterprise risk management

Constraining Factors

• Protracted low interest rate environment has the potential to challenge the Group’s asset liability management
• Significant sovereign risk exposure combined with declining economic conditions in Jamaica

Rating Sensitivity Factors

Factors that could lead to an improvement of the rating and/ or Outlook include:

• An increase in our internal ratings assigned to the sovereign, driven by continued favourable improvements in the macroeconomic environment of Jamaica and a lowering of the debt/GDP ratio

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

• Substantial deterioration in the financial performance and profitability of the Group, with a greater than 10% fall in premium income and an accompanying 10% rise in operating expenses

COMPANY BACKGROUND

Sagicor Group Jamaica Limited (“SGJ” or the “Group”) is a financial services conglomerate that was incorporated in 2013 and is domiciled in Jamaica. The company, which is listed on the Jamaica Stock Exchange (JSE), is 32.45% owned by LOJ Holdings Limited and 16.66% owned by Sagicor Life Incorporated, both wholly owned subsidiaries of Sagicor Financial Company Limited (SFC)^[1]. Its other major shareholder is PanJam Investment Limited (30.2%). The Group is comprised of thirteen (13) subsidiaries with operations in three main countries, these being Jamaica, The Cayman Islands and the United States of America.   Its three (3) largest operating subsidiaries are Sagicor Life Jamaica Limited (SLJ), Sagicor Bank Jamaica Limited (SBJ) and Sagicor Investments Jamaica Limited (SIJ). The Group offers an extensive range of financial products and services in the areas of insurance, banking, asset management, real estate and retirement planning. As at September 30, 2020 the Group’s total assets stood at J $474.5 billion and total revenue was J $60.2 billion^[2]. In 2019, SGJ declared profit attributable to shareholders of J $15.7 billion, the second highest of conglomerates listed on the Jamaica Stock Exchange.

^[1] Following the completion of the business combination and strategic acquisition of Sagicor Financial Corporation by Alignvest Acquisition II Corporation, a Toronto-based Special Purpose Acquisition Corporation (SPAC) in December 2019, a new entity, Sagicor Financial Company Limited was incorporated and listed on the Toronto Stock Exchange.

^[2] Unaudited Interim Accounts for the 9 months ended September 2020.

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile: 1-868-788-4693

E-mail: ajoseph@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

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

Supporting Factors

• Leading market position in the Jamaica insurance industry and a strong distribution network support a consistent and healthy financial performance
• Overall financial stability supported by continued healthy profitability
• Strong capitalisation level, in excess of regulatory requirement

Constraining Factors

• Protracted low interest rate environment has the potential to challenge SLJ’s Asset Liability Management position
• Significant business and financial exposure to the highly indebted Jamaican economy

Rating Sensitivity Factors

Factors that could lead to an improvement of the rating and/ or Outlook include:

• Improvements in the macroeconomic environment of Jamaica resulting in sustained higher levels of economic growth, i.e., real GDP growth of 2% – 3% sustained over the next 12 – 15 months, or significantly lower debt levels i.e., a debt to GDP ratio of below 75% by December 2022

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

• Restructuring of the sovereign (GoJ) debt profile leading to a haircut in the principal of government bonds or a more than 30% reduction in the value of these bonds, thereby adversely impacting SLJ’s concentrated long term annuity business
• Deterioration in the financial performance and profitability of SLJ, with a greater than 9% fall in premium income

COMPANY BACKGROUND

Sagicor Life Jamaica Limited (SLJ or the Company), a member of the Sagicor Group of Companies, commenced operations in 1970 as the first Jamaican-owned life insurance company. In 2013, a holding company, Sagicor Group Jamaica Limited (SGJ) was established, and this entity owns 100% of SLJ. Sagicor Life Incorporated (SLI) is the majority shareholder of SGJ and the principal operating subsidiary of Sagicor Financial Company Limited (SFC)^[1], which itself owns 49.11% of SGJ. SLJ is considered the main operating subsidiary of SGJ. Following the reorganisation of the Jamaican operations, SLJ was delisted from the Jamaica Stock Exchange and replaced by SGJ.

The Company, operating through 12 branches, markets an extensive range of long-term and equity-linked Individual Life insurance products, Group Life, Group Health, Personal Accident plans and Group Pension plans. Some of the Company’s other services include residential and commercial mortgages, annuities, real estate development and management, investment management and lease financing.

[1] Following the completion of the business combination and strategic acquisition of Sagicor Financial Corporation by Alignvest Acquisition II Corporation, a Toronto-based Special Purpose Acquisition Corporation (SPAC) in December 2019, a new entity, Sagicor Financial Company Limited was incorporated and listed on the Toronto Stock Exchange

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Cell: 1-868-788-4693

E-mail: ajoseph@caricris.com

Keith Hamlet

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

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

 Supporting Factors

• Simple transaction structure, with effective credit enhancement built in
• Legal and regulatory framework supporting the transaction provides adequate protection to investors
• TTMF’s sound underwriting practices underpin historically good asset quality

Constraining Factor

• Considerable deterioration in credit quality of the securitised loans in the mortgage pool
• Mortgage pool seasoning along with a challenging economic environment could increase default risk

Rating Sensitivity Factors

Factor that could lead to an improvement of the ratings and/ or Outlook include:

• A return to delinquency levels of 2% – 4% within the underlying mortgage pool over the next 12-15 months.

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

• Persistent delinquency levels of above 20% within the underlying mortgage pool leading to heightened extension and/ or default risk over the next 12-15 months

CMO 2019-01 is a structured finance debt instrument issued by the Home Mortgage Bank (HMB or The Bank) to securitise residential mortgage assets purchased from the Trinidad & Tobago Mortgage Finance Company Limited (TTMF or the Company) on the secondary market. CMO 2019-01 offers participation certificates in 9 tranches in the amount of TT $200 million as follows:

Analytical Contacts:

André Joseph

Tel: 1-868-627-8879 Ext. 224

Mobile 1-868-788-4693

E-mail: ajoseph@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

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.

Caribbean Information & Credit Rating Services Limited (CariCRIS), the region’s credit rating agency, has today placed NiQuan Energy Trinidad Limited (NETL or the Company) on Rating Watch – Developing. This Rating Action was taken following an incident at its Gas to Liquids plant at approximately 6:35 A.M. on April 7^th, 2021. The Company indicated that the plant suffered a serious equipment failure during the start-up of the hydrocracker system that resulted in the blow out of its DA-301 system, a part of the product cleaning process, and caused a fire. The plant was immediately shut down and the fire was subsequently extinguished. Thankfully, the Company reported that there were no casualties. The Company’s personnel are currently working on determining the root cause of the equipment failure and the required safeguards to prevent recurrence going forward.

CariCRIS will liaise closely with the Company’s personnel over the coming days to determine the impact of this event on the Company’s credit rating. While we are pleased with progress made to date in getting the plant to produce GTL product, we are concerned that this incident may pose a further delay in the Company ramping up to full scale commercial production. This, in turn, could adversely impact the Company’s ability to effectively conclude the refinancing of its existing US $120 million debt facility.

A CariCRIS rating is placed on Rating Watch – Developing when events occur that may affect the credit quality of the issuer/issue, the impact of which cannot be accurately assessed at that point in time. A rating placed under Rating Watch does not imply that the rating will necessarily change.

We will be monitoring developments closely over the coming weeks and will adjust our assigned ratings accordingly.

April 09, 2021