With such a rating and outlook of uncertain prospects, international investors will most definitely be very wary of T&T and this could very well be one of the reasons for the sharp decline in FDI in the country.
By Capil Bissoon
On Tuesday, Standard & Poor’s (S&P) affirmed Trinidad and Tobago’s investment grade rating of BBB- and changed the outlook from stable to negative.
BBB- was the same rating that the country received in 2020, with a stable outlook.
For 2020 and 2021, the rating has been a downgrade from 2019 which was BBB.
However, while S&P have kept our rating unchanged from 2020, it is important to note that they have changed the outlook from stable to negative.
Typically, the outlook signals the direction of the next rating, where a positive rating suggests that the rating agency expects to upgrade the rating in the next rating exercise. A stable rating signals that they expect it to remain the same while a negative rating is an expectation to downgrade in the next year.
This negative outlook for 2021 means that next year, S&P anticipates they will downgrade us to BB+ which is speculative or junk grade. This suggests that by 2022, the global community will be regarding Trinidad and Tobago as being risky or have inadequate capacity to repay our international debts obligations based on our S&P ratings.
Another major rating agency Moody’s has been rating T&T as “junk grade” since 2017.
This S&P rating outlook has pronounced that the country is “on track” to have a further downgrade from BBB- so it is indeed very disingenuous of Finance Minister Colm Imbert to pronounce that “this decision validates our strategy to support the economy in the short term while having a clear path to put our public finances under control.”
The consistent mixed messages from the Administration on the true state of the economy are indeed a great source of concern.
Earlier this year, Imbert admitted that T&T was in economic peril and described the current financial situation as “unsustainable.”
Just six months later, with no improvement to the economy, why would the Finance Minister make such a ludicrous prediction to the country that a BBB- rating, which has changed the outlook from stable to negative, differentiates Trinidad and Tobago from most countries of the region and reflects the position of the country as a safe investment place?
With such a rating and outlook of uncertain prospects, international investors will most definitely be very wary of Trinidad and Tobago and this could very well be one of the reasons for the sharp decline in Foreign Direct Investment in the country.
Apart from a negative growth rate and the lack of FOREX, this investment grade rating follows the 2021 UNCTAD’s World Investment Report which showed that among all the countries in the Caribbean, Trinidad and Tobago suffered the worse in Foreign Direct Investment (FDI) in 2020 with negative FDI in the hundreds of millions of US dollars.
In the six years of this Keith Rowley-led PNM Administration, the country has now reached the point where almost all financial indicators are indicating a further downward trend of the economy, all pointing to a much larger looming economic disaster and collapse.