The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Caribbean rating agency yesterday voiced optimism it can help Bahamian debt issuers raise capital at lower costs after being approved to offer its services in this nation.

Wayne Dass, Caribbean Information and Credit Rating Services Limited (CariCRIS) chief executive, told Tribune Business that the go-ahead from the Central Bank would enable it to fill a long-standing gap in the Bahamian capital markets caused by the absence of a local credit rating agency.

CariCRIS approval as an eligible External Credit Assessment Institution (ECAI) in The Bahamas gives it the ability to rate the creditworthiness of companies, public sector agencies and their bond/debt securities issues - a service that local investors have never had access to when it comes to the domestic capital markets.

Mr Dass said the rating agency, which has made The Bahamas the 15th country in which it operates, could potentially give the local corporate market access to a broader pool of lower cost capital - including US dollars - by introducing them to investors across the Caribbean.

Its work also holds the possibility of providing Bahamian investors with greater transparency and more accurate risk assessments around the investment they may be considering, and may provide greater comfort in deciding whether to part with funds.

With the Central Bank approval placing it on the same footing as the likes of Moody's, Standard & Poor's (S&P) and Fitch, Mr Dass said CariCRIS could also conduct credit assessments for Bahamas-based banks to determine the capital adequacy buffers they require to meet the Basle II and III accords' credit risk standards.

He added that the Bahamian banks he met with last year were "very supportive and excited" about CariCRIS' plans to enter the Bahamian market, and he is now planning a follow-up trip in February 2020 to give a more formal introduction now Central Bank approval has been received.

Disclosing that it took about a year to complete the regulator's process, Mr Dass said greater transparency and information was "exactly what we are going to be providing and bringing to the table" for the Bahamian capital markets.

"I think we can play a major role in helping the corporate issuers in The Bahamas," he told Tribune Business. "I think we could play a very important role in helping the local market, and particularly the corporate bond market in The Bahamas, to develop as we can work with corporates to tap the capital markets at lower cost and make them more competitive locally, regionally and internationally.

"We rate on a regional scale, and although investors are sitting in other countries like Barbados, Jamaica and Trinidad, they are looking for other investments and to diversify their portfolios. We would help issuers in The Bahamas attract capital from other countries in the Caribbean based on our Caribbean-scale ratings.

"We can cause a lot of capital, US dollars, to flow into The Bahamas and help with the raising of funding for expansion purposes, which has the knock-on effect of increased employment for the Bahamian people."

It is likely that Bahamas-based companies would still likely have to seek Central Bank foreign exchange approval to raise capital beyond this nation's borders, but the regulator has recently been on a drive to gradually liberalise, or relax, such restrictions.

The absence of a credit rating agency has created a critical gap in Bahamian capital markets infrastructure. Before CariCRIS arrival, there was no independent source to provide standardised reviews of corporate and debt issue creditworthiness in The Bahamas, which may have resulted in some companies having to pay investors a higher premium (interest rate) than warranted.

Some bond offerings, especially from private companies not listed on BISX, will also have been difficult to place due to the absence of information on their financial performance. Hillary Deveaux, the former Securities Commission executive director who now chairs Sebas Bastian's Investar Securities, last year said the absence of a credit rating agency meant some investments were "a crap shoot".

He explained that the absence of a credit rating agency made it harder to properly assess the risk presented by investing in Bahamian companies, and said: "We don't have investment grade. We don't have rating agencies; that's one of the challenges we have. Sometimes, it's a crap shoot."

Mr Dass yesterday said CariCRIS saw itself as "understanding the Caribbean market a little more" than the major international rating agencies, while its operational costs and "economies of scale" meant it was also able to rate the "smaller companies" that make-up 80-90 percent of most regional economies.