JAN 08

Standard & Poor's has lowered its ratings on Grenada from B- to D following the country's failure to make its interest payments on a US$100 million bond due in 2012 and a US$41.5 million RBTT Merchant Bank bond due in 2014.

It is the second downgrade since the island was devastated by Hurricane Ivan in September. Soon after the hurricane, S&P lowered Grenada's long-term foreign and local currency ratings from BB- to B+. The country was also placed on CreditWatch with negative implications.
RBTT, in its 6-month results, reported unrealised marked-to-market losses of $74 million after Grenada's last downgrade in September.

In its latest action on Thursday, S&P lowered its long-term foreign currency sovereign rating from B- to Selective Default (SD) and its short-term foreign currency sovereign from C to SD. An SD rating is assigned when S&P believes that the obligation has selectively defaulted on a specific issue or class of obligations but will continue to meet its payment obligations on other issues or classes of obligations in a timely manner.

S&P also lowered its long-term local currency sovereign credit rating on Grenada from B- to CCC. The long-term ratings, placed on September 17, have been removed from CreditWatch with negative implications and the local term local currency rating has been assigned a negative outlook.

The ratings action are based upon the government's announcement that it would start a comprehensive restructuring of its official bilateral and commercial financial external debt, estimated at 68 per cent of GDP in 2004, said S&P. Negotiations with creditors are expected to begin in early 2005.