Bajan bonds not affected by S&P downgrade

Barbados’ relegation to investment junk status has apparently not affected its standing in the marketplace.

Leading regional investment firm, Jamaica Money Market Brokers, has said that three months after the influential Standard & Poor’s dropped its rating of the island below investment grade, the island’s bonds have not been affected.

“Barbados was recently downgraded by rating agency Standard & Poor’s to non-investment grade. The downgrade to “BB+” with a stable outlook has put the sovereign in a category which the rating agency believes would be more “comfortable” from a fundamentals perspective,” the company said in a September 2012 analysis.

“It is our opinion that Bajan bonds offer good value at current yields. The Bajan 19’s at an offer yield of 7.23 per cent, the 21s at 6.53 per cent and the 22s at 6.45 per cent offer similar yields as Jamaica, a sovereign rated almost six ‘notches’ below Barbados. In our opinion these are good entry points,” it added.

This analysis is good news for the island’s economic stewards as Central Bank of Barbados Governor Dr. DeLisle Worrell prepares to report on the performance of the Barbados economy in the first nine months of this year.

Worrell himself, in a paper released weeks after the S&P downgrade, said that “to date” the island’s bond prices “have not been significantly affected by the downgrade”.

“The downgrade of Barbados’ external debt by Standard and Poor’s does not affect access to international financial

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