Another Rung Down The Ladder: Barbados' Debt Rating Cut Again

Barbados' debt woes continue to weigh on its international credit rating. Today, Moody's lowered its government bond rating by one notch to Baa3 (from BBB, given in June), or just one notch into investment grade (i.e., one notch above 'junk' status; see Wall Street Journal report). The ratings outlook is stable.

In a succinct assessment, Moody's analyst, Alessandra Alecci, said "Barbados' key debt indicators have been on a deteriorating path over the past decade, and are now at levels that compare poorly with other countries in the same rating category." Moody's cited the steep rise in the country's government debt, which Moody's expects to exceed 100% of GDP, compared with 65% in 1999.This is consistent with the views in the IMF's recent assessment of Barbados. Moody's noted that the recession has reduced business and leisure travel, on which Barbados relies heavily. Despite those concerns, Moody's isn't worried about the government's ability to finance its short-term needs or about a balance-of-payments crisis.