By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Senior Chamber of Commerce executives have urged the credit rating agencies to “stroke us with the same stick you beat us with”, and factor Baha Mar’s opening into their next assessments of the Bahamas’ sovereign creditworthiness.
Gowon Bowe, the Chamber’s chairman, told Tribune Business that just as Standard & Poor’s (S&P) had “over-emphasised” the negative impact associated with the Baha Mar dispute, it would do similar when assessing the positives associated with its opening.
“I think Standard & Poor’s over-emphasised the impact it [Baha Mar] was supposed to have, which had a negative impact in terms of their assessments of us, so hopefully they will over-emphasise the impact the opening will have,” Mr Bowe said.
“They beat us with one stick, so hopefully they will stroke us with the same based on the same criteria.”
The two-year delay in opening Baha Mar, and ‘opportunity cost’ associated with the loss of projected job creation, economic activity and GDP impact, weighed heavily in S&Ps decision to downgrade the Bahamas’ creditworthiness to so-called ‘junk’ status just before Christmas 2016.
Its fellow rating agency, Moody’s, has taken a more sanguine, measured view of the Baha Mar travails, and their economic and creditworthiness impact, keeping the Bahamas one notch above ‘junk’ in its own assessments.
Edison Sumner, the Chamber’s chief executive, agreed with Mr Bowe that S&P should factor Baha Mar’s opening, and subsequent planned ramp-up of hirings and activity, positively into its next Bahamas assessment if it applied the same rating criteria.
“We’ve said, especially over the last three years when we saw the effect the project had on the sovereign credit rating, that as significant an investment as Baha Mar is, it was not the only investment in the country, and still lis not” Mr Sumner told Tribune Business.
“We cautioned then that we should not have put all our eggs in one basket with Baha Mar as the saviour of the economy. That’s still our position, but we support the development of Baha Mar. When we saw that Baha Mar is going to contribute 12 per cent of the country’s GDP, we cannot ignore that.”
Mr Sumner acknowledged that Baha Mar was “not the sole reason” for the Bahamas’ repeated credit rating downgrades to ‘junk status’, and the resort’s impact will likely be offset in S&P and Moody’s assessment by the persistent $300 million-plus annual fiscal deficits and rising $7 billion national debt.
However, the Chamber chief executive echoed Mr Bowe in arguing that just as the Baha Mar dispute and delayed opening had been used as “a whipping stick” by S&P, its opening justified an improvement in ratings of this nation’s creditworthiness.
“When the rating agencies came in to assess our sovereign credit rating and liberally gave us downgrades, they cited Baha Mar as a big part of the rationale for doing so,” Mr Sumner told Tribune Business. “That it had not opened and was becoming a drain on the economy.
“The same way the rating agencies used the stick of Baha Mar to downgrade the sovereign rating given to the country, they should come back and acknowledge the progress made and lift the credit rating of the country.
“You should not use Baha Mar as a whipping stick and to downgrade the country, but now that it’s open and running, ignore it as a factor in considering an uptick to the rating,” the Chamber’s chief executive continued.
“For them not to do so will cause us to bring other things into question. For them [the rating agencies] to maintain integrity in the process, they must now consider an uptick in the country’s rating.”
Reversing the persistent credit rating downgrades suffered over the past two administrations will positively impact Bahamians, as it should in theory reduce the Government’s future borrowing costs on the international capital markets.
This, in turn, will improve the country’s access to the global markets and reduce future borrowing (debt servicing) costs, enabling the Government to divert more money to public services such as health, education and social security, plus the law enforcement agencies.
Mr Bowe, meanwhile, said the Bahamas was now poised to see “the fruits of our labour”, with Baha Mar having taken 13-14 years, two developers and three administrations to come into being.
“It’s been a long labour; the birth of the property,” he told Tribune Business. “To be candid, any Bahamian, when you look at the size of the property, would realise that for it to go unutilised for a long period of time is in no one’s interests.”
Mr Bowe said Baha Mar’s new owner, Chow Tai Fook Enterprises (CTFE), was implementing the property’s phased opening “in a very structured manner”, and with “a vision for what they’d like to see”.
He added: “I think that what we need to do now is be positive about what it [Baha Mar] can produce, and that’s not to say we don’t hold them [CTFE] to account for obeying the law and ensuring the Bahamian economy benefits from it, but it’s looking at it half-full as opposed to the glass being half empty.”
Comments
banker 6 years, 12 months ago
These guys are smart enough to know that the only thing that counts is a positive revenue statement from Baha Mar. The greatest bellwether of success is to examine the advance bookings now with travel agencies and online GDS systems. The first time it was announced that BahaMar was opening, folks booked rooms by the thousands for weddings and holidays. That well has been poisoned. I'd love to see the advance booking numbers. Somehow, I don't think that they are impressive.
Sickened 6 years, 12 months ago
killemwitdakno 6 years, 12 months ago
HA HA ha ha. Bravo.
( Even though it was Perry who factored it in too broadly )
OldFort2012 6 years, 12 months ago
0% GDP growth for 4 years straight, 12% unemployment, massive budget deficits, GDP to debt ratio of over 75%...and these guys want an upgrade? Pigs will fly first.
ThisIsOurs 6 years, 12 months ago
This would presume that the only reason we were downgraded was the failure to open Bahamar. I don't believe so. I personally believe the agencies have zero confidence in the Christie administration. Why would they? Especially after blowing 1 billion in new revenue. . Were the PLP to win, I'm betting we're downgraded again within two months
Porcupine 6 years, 12 months ago
As if BahaMar has anything to do with the rampant theft, lack of corporate governance, lack of accountability, extensive conflict of interest issues, the destruction of investor faith in The Bahamas due specifically to BahaMar proceedings, and on and on. This, according to Bowe and Sumner, are good for our country so that we can continue to borrow at a lower rate. Hey, all of your credit cards are maxed out. But, here is one at a 16% interest rate. Go for it. The whole nest of these so-called financial gurus are living in la-la land. BahaMar only exemplifies how low this country can crawl.
JohnDoe 6 years, 12 months ago
The reason BahaMar would have factored in any downgrade in the first place was because of the sovereign/country risk posed not only by it's delay in opening but more importantly by the imprudent and obviously bias intervention of government in what was essentially a commercial contractual market based dispute. I find these comments from the Chamber particularly disturbing and misguided especially in light of the obvious what appears to be systemic corruption and conflict of interest charges being lobbied at Cabinet Ministers with respect to this BahaMar project. An environment of systemic corruption and conflict of interest by top ranking government officials alone is sufficient grounds to downgrade an economy because in such an environment self-enrichment of the political players is the most important incentive in decision making and not GDP growth, high employment or efficient use of VAT revenue.
banker 6 years, 12 months ago
Co-sign
Well_mudda_take_sic 6 years, 12 months ago
Spot on! You can add to this the fact that most Bahamians are known to be be stupid enough to continue voting along party lines in which case Christie or Minnis will likely be the next PM. And the ratings agencies know full well what this means for the Bahamas, especially if the voters are so fool as to allow the greedy power hungry dimwitted Minnis to become PM! That would assuredly be a fate worse than death for all of us!!
Well_mudda_take_sic 6 years, 12 months ago
As I've repeatedly said, Minnis has failed to passionately commit to the undertaking of the following eight (8) vital actions and measures that are absolutely necessary to turn things around for the Bahamas:
1) Hold a Royal Commission of Enquiry to investigate the more egregious instances of corruption, fraud and outright theft that have occurred under the Christie administration during the last five years:
2) Pass meaningful and enforceable freedom of information legislation with few exceptions or loop holes for the government and politicians of the day;
3) Introduce new enforceable financial disclosure requirements for MPs and senators alike, free of the existing loop holes and with stiff penalties of substance for non-compliance within the specified timeframe.
4) Establish a formal Office for a truly Independent Director of Prosecutions in order to once and for all end the government's ability to wrongfully interfere with the judiciary through its de facto executive (PM) control of the Office of the Attorney General;
5) The wholesale repeal of the gaming web shop legislation;
6) New legislation to establish a National Lottery, the profits from which would be earmarked solely for the purpose of contributing to the financial needs of our public education system;
7) Tighten legislation to give the Office of the Auditor General and the Public Accounts Committee the biting teeth they need to discharge their important duties in the way intended and expected; and
8) Introduce campaign finance reform legislation to avoid the will of Bahamian voters being thwarted by large amounts of 'tainted' money directed at politicians by the likes of Sebas Bastian, Craig Flowers, Peter Nygard, Christie's Red China friends, and so on.
A couple of these vital initiatives are lightly touched on in the FNM manifesto. The DNA manifesto addresses even more of them. But a passionate stance by Minnis and the FNM on implementing just these eight major actions and measures alone would go a long ways towards putting the Bahamas on the right road for its future and the betterment of the Bahamian people. You would think those registered voters who might be inclined to support the FNM would be insisting the FNM candidate in their constituency emphatically endorse each of these eight critically needed initiatives. It is indeed surprising that Minnis himself has made no meaningful or passionate commitment to registered voters to undertake these most important matters as a matter of priority should he become PM. Minnis instead prefers to ramble on and on ad nauseum about how the Christie-led PLP government has failed the Bahamian people. It's as if Minnis and the FNM believe they need not commit to anything on our behalf. That just can't be right and should give each of us voters serious pause for thought!
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