On June 16, the Bahamas issued a USD 385 mn Blue Bond in two tranches. The first is a USD 135 mn bond coming due in 2036 with a USD 200 mn IADB guarantee that covers all the scheduled cash flows. 

The second is a USD 250 mn bond coming due in 2029 that enjoys a “residual guarantee” tied to the former. However, this residual guarantee is unlikely to come into play realistically. 

We find BAHAMA 29 unattractive, as it inherits the sovereign risk of its issuer. However, the yield on BAHAMA 36 offers an attractive premium to IADB bonds, despite the strong guarantee. 

We estimate that the overall balance will reach -4.7% of GDP in FY2022/2023, a wider deficit than the -4.3% estimated by the government.

Considering the results of 1H2022, we adjusted our forecast upwards to 8.9%, but the current economic crisis in the US represents a major threat to the Bahamian economy.

Higher tourism receipts are not enough to offset the rising import bill driven by the commodity rally. So, we increase our current account deficit forecast to -9.4% of GDP.

Despite the delay in the publication of inflation figures, we believe that the rising commodity prices have pushed domestic prices up, especially in ...

At the end of 2021, Barbados' FX reserves rose by 713% from their minimum in January 2018, while reserves in The Bahamas and Jamaica showed an increase of 66% and 28% in the same period.

Our three countries pass the three suggested reserve adequacy measures.

The Bahamas and Barbados reserves are above 200% of the ARA metric, and Jamaica is in line with 137.5%.

Jamaican authorities are working more actively to ease the impact of external shocks.

The selloff in risky assets is compounding on an unattractive risk/reward proposition for names in the Caribbean. We retain our SELL recommendation for Bahamas and Jamaic...

Public debt stands at 81.3% of GDP, domestic debt at 44.8%, and external debt at 36.5%. 

External debt has risen by USD 600 mn and domestic debt by USD 500 mn since March 2021. 

Two Eurobond issuances are expected for the immediate future, one guaranteed by the IADB at a AAA rating and a non-guaranteed one at a B+. 

Solvency indicators are negative, as debt continues rising and we see a possible default ahead. 

SELL: Global headwinds, current credit spreads, and poor solvency indicators create an unattractive risk/reward proposition for the name. 

Higher oil prices will hurt Barbados, The Bahamas, and Jamaica, which rely on fuel imports primarily for electricity generation and transport.

We estimate that oil imports will increase between 1.6% and 3.8% of GDP in those 3 Caribbean countries.

The good news is that tourism is also recovering because of the relaxation of Covid-19 related restrictions.

However, there are downside risks related to the increase in oil prices and the conflict in Ukraine, which could affect international tourism.

We expect the Bahamian economy to grow 7.8% in 2022 thanks to the recovery of international tourism.

We estimate that the fiscal deficit will decrease from 6.7% of GDP to 5.8% by the end of FY2022/23, while the primary deficit will decline from 2.3% of GDP to 1.5%.

We believe that the government would not be able to fulfill its debt commitments without accessing concessional loans, hence, it could request IMF assistance in the short term.

Despite the recent criticism against PM Davis, we believe that he will continue to lead a stable government.

The Bahamas could not improve its fiscal situation while indicators con...

On September 16, the opposition Progressive Liberal Party (PLP, center-left) won the general election by a landslide

We believe that the government's plan to increase tax revenues is incompatible with the promise to reduce VAT from 12% to 10%

The new pm said that his administration plans to meet debt obligations but stated that when they could not do so, they would seek to renegotiate the terms so as not to be in default

Although at first glance, PM Davis seems to have good intentions, after a deeper look we believe that his goals could be unrealistic

HOLD: Despite the opposition victory, bonds have been sufferi...

All forecasters expect a hurricane season above normal.

NOAA estimate that there will be 13 to 20 named storms, of which 6 to 10 could become hurricanes, including 3 to 5 major hurricanes.

We generally believe that the tourism outlook is positive, as the current levels of tourist arrivals are much higher than those observed in 3Q20.

Under high uncertainty, we maintain our growth forecasts and believe that these could be adjusted upward given the higher-than-expected tourism recovery.

The economic impact of natural disasters adds a new wrinkle to the assessment of BAHAMA, BARBAD, and JAMAN bonds. Of those three, howe...

Among our sample of countries, The Bahamas showed the worst fiscal results in the pre-pandemic period

We estimate that Jamaica will improve its fiscal performance by registering a fiscal balance of -0.6% of GDP during FY 2021/2022 (from -3.6% in FY2020/2021).

Barbados would show a slight improvement in the primary deficit from -1% of GDP to -0.5% but would maintain the same level of fiscal deficit (5% of GDP)

The Bahamas will register a fiscal balance of -10.2% of GDP during FY 2021/2022 (from -13.5% of GDP in FY2020/2021)

We reaffirm our ratings for the bonds of The Bahamas (BUY), Barbados (HOLD), and Jamaica (SELL...

In 2020, Barbados’ economy fell -18%, Bahamas’ -16.3% and Jamaica’s -9.9%.

The Bahamas had the worst performance in our group with a decrease in exports of goods and services of -65.3%.

The Caribbean countries have an advantage because their main sources of tourists are advanced economies that will likely complete their vaccination programs in the 3Q21.

However, we believe that the Caribbean countries will experience a rebound of international tourism as of 4Q21 due to their slow vaccination process.

HOLD: The improved outlook for tourism in 2022 should open up opportunities in The Bahamas’ c...

We assessed the bonds of 5 different Caribbean countries, and conclude that Bahamian debt has significant upside potential.

Additionally, Bahamas has almost the highest yields of all its regional peers, in addition to high coupons.

On the economic side, the COVID-19 outbreak will impact every Caribbean country analyzed, which leads us to compare relative strengths in credit indicators.

With no major differences within credit indicators, Bahamas’ mix of high coupons and yields makes it attractive.

Even though the upsides will likely materialize in the medium term, Bahamas could benefit from the authorities&rsqu...

Last year, the government was firmly committed to joining the WTO. Recently, statements by government spokesmen have been more cautious. The Minnis government does not want to assume the political cost of an unpopular decision. For this reason, Zhivargo Laing, the main negotiator of the Bahamas in the WTO, suggested on its Guardian Radio program that the Bahamas was unlikely to meet the June 2020 accession deadline.

On July 1, 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with the Bahamas.

The IMF reduced its economic growth projection from 2.1% to 1.8% in 2019. They expect medium-term GDP growth to converge to its 1.5% potential.

According to the monthly report of the Central Bank of the Bahamas on the monthly economic and financial development (MEFD) of May, the economy maintained its modest pace of expansion, driven mainly by the improvement in tourism figures.

The International Monetary Fund (IMF) did a 11-day visit to Nassau for the annual Article IV consultation with the government and private sector. During this visit, the IMF mission concluded that: “The Bahamas delivered strong economic performance in 2018, supported by sound macroeconomic policies and progress on fiscal reforms. With downside risks prevailing, maintaining this positive momentum requires broad-based reforms to strengthen institutions, improve competitiveness and external accounts, and bring public debt on a downward path”.

In the last monthly report of the Central Bank of The Bahamas on economic and financial development (MEFD) it was announced that the Bahamian economy continued to experience an "upward trajectory" in February. This is the result of an increase in the number of long-stay visitors supported by improvements in the tourism sector, and foreign investment projects in the construction sector.

"Expectations are that the economy of the Bahamas will continue to show positive trends in the short term, amid the sustained growth of the tourism sector and the impulse of construction activity led by foreign investment."

In the first six months of the current fiscal year, the fiscal deficit contracted by 31%, around USD 78.7 million, compared to the same period of the previous fiscal year, standing at USD 175.3 million. If the goal of the Fiscal Responsibility Law for the period 2018/2019 were reached, this would result in a corresponding reduction of 45.5% in the fiscal deficit in relation to GDP, which would be 1.8%.

In relation to this, the minister said that the debt / GDP ratio is expected to decrease 1.1% to reach 56.7% in June of this year. The Central Bank of the Bahamas said that the government's success in reducing the deficit and gradu...

Acting Prime Minister and Finance Minister of the Bahamas, K. Peter Turnquest introduced the Mid-Year Budget Statement 2018/19 to the House of Assembly last week.

He mentioned that the Bahamas economy benefited from the completion of several Foreign Direct Investment (FDI) projects in 2018, including the opening of the final phase of the Baha Mar resort, the Rosewood Hotel, and the official opening of the complex of entertainment at The Pointe.

He explained that approximately nine companies have been approved under the Commercial Enterprises Act, some of which would also have contributed to FDI. "With more projects in the ...

In the first quarterly press conference of the Central Bank on the economy, Governor John Rolle explained that the projected GDP growth rate is 2.1% by 2019. In his opinion, this is a realistic goal, given that the development of USD 4,200 million of Baha Mar is now in its first full year of total operation.

However, forecasts from the International Monetary Fund (IMF) show that the Bahamas will return to its long-term average GDP growth rate of 1.5% from 2020 onwards. If that happens, this nation will not even be close to achieving the 5.5% growth that the IMF said was necessary to reduce unemployment.

From May to November, th...

On January 15, the Department of Statistics of the Bahamas published the Foreign Trade Report for the third quarter of 2018. The results show that the value of goods exported from the Bahamas increased 39% with respect to the same period of the previous year, to reach a total of USD 114 million. Regarding imports, during the same period they increased by 10% to reach USD 891 million.

Despite the significant improvement in exports, the trade balance showed a detriment with respect to the same period of the previous year, going from a negative balance of USD 730 million to a negative balance of USD 777 million. It is worth taking into ...

Last week, the leading government negotiator, Zhivargo Laing, made public the offer of goods and services of the country that was officially submitted to the World Trade Organization (WTO) in August 2018. Regarding the tariffs proposed in the document Mr. Laing described the following issues: "First, the most sensitive items (agriculture and manufacturing) that are produced in the country have proposed rates higher than the rates currently applied. we call the tariff of existing support programs. "

The government has emphasized the economic benefits of joining the WTO, among the main highlights that historically countries t...

Recently, the visit of a mission of the International Monetary Fund to the Bahamas culminated, in which they indicated that the Caribbean country will continue its path of economic recovery. The agency projects that GDP will increase 2.3% in 2018 and, by 2019, growth will slow slightly to 2.1%.

The leader of the IMF mission, Fabian Bornhost, highlighted the efforts of the Bahamian government regarding its fiscal policy. "The enactment of the Fiscal Responsibility Law (LRF) is a positive development that supports the government's efforts to ensure fiscal sustainability and reduce debt levels. The implementation of the FRL fra...

In spite of the greater indebtedness, the rating agencies evaluated positively the punctuality with which the performance report was published. In addition, the increase in the periodicity of reports, going from annual to quarterly, implies a step forward for the government to recover political credibility. Fiscal transparency is fundamental to recover the confidence of investors, so that their credit rating could be maintained or improved in the next revisions according to Moody's. The risk rating agency said that the new fiscal reports "from a monitoring perspective, will allow a better understanding of the effect of fiscal deve...

The estimated deficit was USD 52.0 million, a reduction of 52% compared to USD 108.6 million recorded for the same period in 2017. To meet its operational requirements, the government incurred a net increase in liabilities of USD 136.5 million during This period, bringing the total amount owed by this nation to around USD 7.38 billion, which means an increase of 1.9% compared to June 2018.

First quarter revenues increased by USD 60.1 million to reach 513.8 million, mainly due to an increase in stamp duty collections, which showed an increase of 90% compared to the first quarter of last year and the value added tax (VAT) ), which regi...

On October 11, the Parliament approved the Fiscal Responsibility Law that will be implemented as of this month.

In the face of doubts about the entity that was appointed to supervise fiscal targets, Finance Minister K. Turnquest emphasized that, despite its provisions, for legislation to be truly effective, public participation and oversight are important

On the other hand, a report published by the OECD establishes a list of 21 countries whose "golden passport" schemes threaten international efforts to combat tax evasion. The different credit agencies in previous reports have seen in the policies against tax evasion ...

For the Bahamas, the approval of the Fiscal Responsibility Law, which will regulate the government in tax matters and allow the Bahamian economy to gain credibility and stability, is fundamental. After the summer recess, finally, the Bill was delivered to Parliament for discussion on September 27.

Although the Acting Prime Minister explained that all comments and suggestions from different stakeholders, such as the Chamber of Commerce and the Confederation of Employers of the Bahamas, the Organization for Responsible Government and the Central Bank of the Bahamas were considered for the revised bill; Some actors are "particularl...

The sessions in the Bahamas parliament resumed today, September 19, after its summer recess. Among the Government's main priorities is the approval of the draft Fiscal Responsibility Law. Finance Minister Peter Peter Turnquest said the bill could be submitted to Parliament this week. However, he acknowledged that he will be competing with several other bills, including the proposed laws to comply with the European Union (EU) tax evasion lawsuits and to address issues related to accession to the World Trade Organization (WTO). .

Budget Report 2018/2019, prepared by the Ministry of Finance of the Bahamas, described the level of debt as "unsustainable". Debt levels have been continuously climbing for the past ten years; between 2008 and 2017, debt levels increased by 160 per cent. Currently, the debt amounts to 7.19 billion dollars, which represents 57.2% of GDP. Although the IMF maintained its projection of GDP growth in 2018 of 2.5%, the growth estimates for the coming years are lower; this would further complicate the country's public finances. To address the state of fiscal affairs, the government took the decision to raise additional rev...